Innocent Mistakes - Voided Claims
Cyber insurance applications are legal documents—and insurers take every checkbox seriously.
If a business unintentionally overstates its security controls, even by accident, a claim can be denied. Worse, if an MSP helped provide the information, we can get swept into the fallout too.
Most clients assume these applications are routine paperwork. In reality, they’re closer to sworn statements. And when the answers don’t match what investigators find after an incident, the results can be painful.
Let’s look at how these situations unfold and how to avoid them.
A Real-World Pattern: Claims Denied After the Fine Print Kicks In
Across the industry, insurers have become far more aggressive about verifying the accuracy of security claims. We’ve seen multiple cases where businesses thought they were answering honestly, but after a breach the insurer rescinded coverage based on discrepancies.
Here’s a common example we’ve seen play out:
A company reports a ransomware incident and files a cyber insurance claim. Investigators review the application and discover that the business claimed:
All remote access required MFA
All servers were fully patched
Backups were verified daily
But the reality after the breach looked more like:
MFA was turned on for some users, but not all
A critical server hadn’t been patched in months
Backups existed but hadn’t been tested or were not restorable
None of these mistakes were malicious. In most cases, the person completing the application simply didn’t understand the scope of the question—or assumed controls were in place because “IT handles that.”
But insurers don’t grade on effort. They treat these statements as facts. And when the facts don’t hold up, they can—and increasingly do—deny coverage.
This trend is industry-wide, and it’s reshaping how businesses and MSPs need to handle these applications.
Where Good Intentions Go Wrong
A major source of unintentional misstatements comes from the way insurance questions are written. They’re broad, sometimes vague, and often encompass every technology system a business owns, not just the ones we manage.
Take a question like:
“Do you have backups for all critical systems?”
You might know that we back up your servers, Microsoft 365, and workstations. But the insurer is asking about all critical systems, which could include:
Cloud databases managed by a vendor
Manufacturing equipment controllers with embedded firmware
Specialty medical or diagnostic devices
Legacy systems no one has logged into since 2017
Custom software hosted by a third party
If even one of these systems lacks a functional, restorable backup, the correct answer isn’t “Yes”—even if 90% of your environment is covered.
Another example:
“Is MFA enforced for all administrative access?”
From our perspective, MFA may be deployed on the systems we manage. But administrative access might also exist in:
Vendor-managed portals
Cloud apps we aren’t contracted to oversee
On-prem systems built by another provider
Equipment interfaces that don’t support MFA at all
If those areas don’t enforce MFA, insurers consider the answer incorrect.
These questions are designed to assess total organizational risk, not just the portion under our responsibility. That’s why it’s essential to treat our input as partial, not comprehensive.
How We Protect You (and Us) When Assisting With Applications
When clients ask us for help answering cyber insurance questionnaires, we follow a clear process to ensure accuracy and reduce risk:
1. We only vouch for what we manage.
We’ll tell you exactly what controls are in place on the systems under our care. Everything else requires internal verification on your end.
2. Every control must match documented reality.
If you can’t produce proof during an investigation, the insurer may treat the original answer as a misrepresentation. We help ensure our answers are backed by evidence.
3. You’ll sign off on the final answers.
This protects both parties and ensures the insurer knows you are the authoritative source of the full application.
4. For true peace of mind, consider a full pre-insurance assessment.
This paid evaluation reviews your entire environment—managed and unmanaged—so your application reflects the real state of your security controls.
Cyber Insurance Should Protect You—Not Surprise You
When configured and documented correctly, cyber insurance provides invaluable protection. But an inaccurate application can do the opposite—denying coverage at the moment you need it most.
We’re here to guide you, support you, and ensure the systems we manage meet the standards insurers expect. And with accurate, well-documented answers, you can secure coverage confidently instead of holding your breath during a claim.
If you’re preparing to renew your cyber insurance or applying for the first time, let’s talk. We can help you navigate the process, avoid misunderstandings, and strengthen your overall security posture.
