By Janardhan N 
Everything You Need to Know About Cyber Insurance Claims and Coverage
We are all aware that cybercrime is on the rise, and so are cyber insurance claims. Cyber Insurance is something that businesses can no longer ignore.
These numbers are enough to make it clear:
- 52% of first-party losses result from third-party breaches.
- In 2024, 60% of cyber claims originated from incidents like Business Email Compromise (BEC) and Funds Transfer Fraud (FTF), with nearly 30% of BEC events leading to FTF.
- Small and medium-sized businesses (SMBs), those with annual revenues of less than $25 million in annual revenue, accounted for 64% of cyber claims.
These stats aren’t surprising. They’re a reality that many businesses face every day. So, if you’re looking to learn how to file a cyber insurance claim, you’re in the right place.
In this guide, we’ll break down the entire cyber insurance claim process for you. You’ll learn what’s covered in a cyber insurance claim, how to file one, and the documents you’ll need.
What is a Cyber Insurance Claim?
A cyber insurance claim is a request to your insurance provider to cover the financial losses and operational delays caused by a cyberattack.
While cyber insurance coverage cannot prevent cybercrime, it can help mitigate the consequences by covering the costs associated with a breach, including legal, financial, and recovery-related expenses.
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What is Covered in a Cyber Insurance Claim?
When you have a cyber insurance policy in place, there are a few particular areas of coverage that would apply to a claim.
Data Breach Expenses – If your customer data is compromised, the policy would cover the significant costs associated with investigating the breach, notifying your customers who may be affected, and providing credit monitoring to impacted customers.
Business Interruption – If your business is large enough that an attack or data breach would interrupt business, the policy will cover your income loss while the company is down.
Cyber Extortion – If your business is targeted in a ransomware or cyber extortion claim, this coverage would pay ransoms for cyber extortion.
Data Restoration – If malware or hacking caused loss of data or damage to your data, this coverage would pay for your costs to recover or restore the data.
Regulatory Penalties – If your data breach caused fines for violating data protection law, the policy would apply to the defense costs associated with the breach.
Legal Costs: The policy covers lawyer fees and any related legal expenses if a lawsuit follows the cyber incident.
Identity Theft: It also covers the costs associated with the theft of personal data and its use in identity theft.
Notification Costs: The policy covers the cost of informing affected individuals whose data was exposed.
Reputation Management: The policy provides assistance with PR expenses to help restore your company’s reputation after a cyber event.
How to Claim Cyber Insurance
Filing a cyber insurance claim might be stressful, but it can be made easier with proper preparation. Here is a step-by-step guide to the Cyber Insurance Claim Process.
Report the Cyberattack Immediately: The first thing you should do is file an FIR at the nearest police station and cyber cell department. After that, you will need to report the cyber incident to your insurance provider. It is advisable to report the incident as soon as possible, as insurance companies may have time-sensitive requirements.
Fill out the Claim Form: Your insurer will request that you complete a claim form. The claim form must be completed and submitted thoroughly and accurately. It will ask you to describe your cyber attack, including its probable consequences for the business, and what you’ve done thus far to recover the situation.
Submit Required Documents: You will need to submit the claim form and the various supporting documents, which are discussed in detail below.
Investigation by Forensic Experts: Your insurance company may hire a team of forensic specialists to investigate the incident. Their goal is to confirm whether the cyber breach was legitimate and to assess the extent of the damage.
Claim Approval Process: Once the forensic investigation is complete, your insurance company will review all the information and then approve or deny the claim. They may also determine the payout amount.
Claim Payout: If your claim is approved, the insurance company will then release the payment to you within a few days. This will cover the expenses outlined in your policy, such as business interruption losses, legal costs, and data recovery costs, among others.
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What is the eligibility for a Cyber Insurance claim?
The eligibility requirements for filing a cyber insurance claim are listed below.
- Age: A minimum age of 18 is required to acquire a cyber insurance policy. This is a basic condition for nearly all types of insurance, including cyber insurance.
- Citizenship: If you’re in India, you must be a citizen to buy a policy. Non-citizens or underage individuals cannot purchase a cyber insurance plan.
- Claim Validation: Your claim will only be approved if it passes a validation process. After you submit your claim form and documents, the insurer will check their authenticity. A forensic team will also investigate the incident to confirm the validity of the breach. Once both the insurance provider and the forensic team confirm the breach as legitimate, your claim will be processed.
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Documents required for Cyber Security Insurance Claim?
When filing a cyber insurance claim, you must provide these specific documents to support your case.
- Claim Form: This should be filled out and signed.
- Police FIR: A copy of the FIR lodged at the police station after the cyber incident.
- Proof of Loss: You must document when and how the company incurred the loss after the Cyberattack- an example would be a breakdown of lost revenue.
- Forensic Report: If you have a forensic report, this will help to authenticate the nature of the attack and its impact.
- Restoration Expenses: If you incurred restoration costs for lost or damaged data, you may include those bills or other supporting documents.
- Loss Evidence: This could include screenshots or photocopies showing evidence of the breach, such as malware detections or files that were corrupted.
- Legal Documents: If you had to take legal action, you would have to include documents related to notices, summons, court papers, etc.
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Cyber Insurance Waiting Time
After acquiring a cyber insurance policy, you must wait a certain amount of time before filing a claim. This waiting period can be different depending on the insurer, but it is mostly 8 – 12 hours. During the waiting time, you are unable to file a claim for any cyberattacks or data breaches that occur.
Conclusion
At this point, you have understood the cyber insurance claim steps, required documents, and eligibility criteria for a hassle-free claim process. The better prepared you are, the faster and more efficient the procedure will be.
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FAQS on Cyber Insurance Claims Process in India
Q1. How to handle cyber claims?
To handle a cyber claim, immediately file an FIR with the local police and cyber cell, then report the incident to your insurance provider without delay. Complete the claim form accurately and submit it along with all required documents. The insurer may appoint forensic experts to investigate the breach before processing and approving the claim.
Q2. What is the procedure for filing an insurance claim?
Start by reporting the cyber incident promptly to both the authorities and your insurer. Fill out the claim form detailing the nature of the attack and its impact. Submit all supporting documents, after which a forensic investigation may take place. Once reviewed, the insurer will approve and pay out the claim based on your policy coverage.
Q3. What is the most common cyber insurance claim?
The most common cyber insurance claims involve data breaches. These include costs for investigating the breach, notifying affected individuals, offering credit monitoring, and managing legal or regulatory consequences.
Q4. Does cyber insurance pay out?
Yes, cyber insurance pays out if the claim meets policy terms. Covered payouts may include data recovery, business interruption losses, ransom payments, legal fees, and regulatory penalties, depending on the situation and coverage.
Q5. What is a cyber insurance claim?
A cyber insurance claim is a formal request made to your insurer after a cyber incident like hacking, data theft, or ransomware. It allows you to recover costs associated with business disruption, legal issues, data loss, and other damages outlined in your policy.
Q6. What is covered by cyber insurance?
Cyber insurance typically covers costs associated with data breaches, business interruption, ransomware attacks, data restoration, legal fees, regulatory fines, identity theft recovery, notification expenses, and brand reputation management following a cyberattack.
Q7. What isn’t covered by cyber insurance?
Cyber insurance does not cover losses due to fraud or illegal activities by your team, hardware or power failures, business insolvency, ongoing legal issues from before the policy started, or any illegal personal profit made by executives.
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daksha Jain