What Does Cyber Insurance Not Cover? | Summit Cover

September 6, 2023

In an age dominated by digital technologies, cyber insurance has become more vital than ever for protecting businesses from financial and reputational fallout from cyberattacks. It offers significant benefits but there may also be restrictions or exclusions. In this blog post, we'll highlight What does cyber insurance not cover, so you can make more informed decisions for your company.

Cyber insurance is a necessity in this era of the digital economy, personal data breaches and cybercrime are at an all-time high and organizations need assurances that they will be able to withstand the financial strains of these events. Cyber security protects against incidents such as system failures, data breaches, cyber extortion, and cyber liability. However, while it is an excellent form of protection, it is not a panacea, and there is a list of what does cyber insurance not cover, including data loss, cyber extortion, and cyber liability.

1. Loss of Data:

Despite its prevalence, data loss is a particularly common case of what does cyber insurance not cover often. Data loss is an ongoing danger for businesses; a breach or virus can lead the organization to lose any data stored on its network. When private data is leaked or stolen, or when data is erased or destroyed without authorization, this can happen. Because it is often difficult to prove that an incident was caused by an outside actor rather than a human or technical error, cyber coverage typically does not cover these types of losses. Read More : Cyber Insurance Requirements.

2. Cyber Extortion:

Cyber extortion is a very new type of cybercrime. Ransomware, or cyber extortion, is a procedure in which hackers hold a company's data hostage and demand payment to release it. This method can be extremely destructive to an organization, resulting in data loss and even financial losses due to the high cost of ransom payments. Unfortunately, due to the difficulty of proving that the incident was caused by an outside actor rather than the company's own negligence, cyber insurance does not typically cover cyber extortion incidents.

3. Cyber Liability:

Finally, Cyber Liability refers to a company's accountability for financial losses caused by data breaches. This approach is especially problematic because fraudsters are growing more competent at locating and exploiting weaknesses, which can result in significant regulatory fines. Due to the difficulties of demonstrating that an incident was caused by an outside actor rather than the company's own purposeful or negligent actions, cyber liability is another case of what does cyber insurance not cover. The difficulty in demonstrating that the incident was caused by an outside actor rather than by the company's own fault.  If the company has purchased an additional cyber liability insurance policy, liability coverage can be given; however, most policies do not include this as a default option. Read More : Who Needs Cyber Insurance?

Cyber Insurance Coverage:

Cyber security insurance coverage can help mitigate the financial impacts associated with incidents like data breaches, ransomware attacks, and other threats to cybersecurity. Typical expenses covered typically include notifying affected parties of an incident via notifications as well as legal fees associated with public relations efforts or potential lawsuits resulting from such events, but it must be remembered that its scope can only ever cover certain scenarios.

Limitations of Cyber Insurance

Many people ask, what does cyber insurance not cover? - So here are some limitations of this policy:

1. Limited Business Interruption Coverage:

This policy may cover some business interruption costs associated with cyberattacks, such as downtime due to downtime caused by such an incident. Furthermore, business interruption coverage frequently has trigger events for eligible claims, so not every disruption qualifies for compensation.

2. Gradual Data Breaches: 

Many people wonder, Do I need cyber liability insurance? - It typically provide coverage for sudden or unforeseen incidents; however, data breaches that happen gradually without being discovered could fall outside its purview and be difficult to attribute back to one specific incident.

3. Delay in Discovering an Incident:

If a cyberattack takes place but goes undetected for too long, its costs might not be covered by the policy - prompt discovery and reporting are essential in order to maximise coverage.

Exclusions From Cyber Insurance

  • Intentional Acts: It typically excludes coverage for incidents caused by intentional acts by an insured party in order to deter fraudulent claims and protect insurers' bottom lines. This exclusion serves to keep claims low-key. And one of the main answers to “What does cyber insurance not cover?”
  • Vulnerabilities: When businesses become aware of cybersecurity vulnerabilities but fail to take adequate precautions in addressing them, this policy may no longer cover any resulting incidents. Insurers expect businesses to take reasonable steps against known risks in order to stay insured against them.
  • Regulatory Non-Compliance: If a business violates data protection regulations such as GDPR or HIPAA, might omit coverage for fines and penalties resulting from noncompliance.

Closing Gaps in Comprehensive Protection

1. Strengthen Cybersecurity Measures

Investment in strong cybersecurity practices remains the first line of defence against threats and prevention is key in order to minimise incidents that require premium payments in the future.

2. Supplemental Coverage:

Businesses may want to look beyond policies to fill any coverage gaps they might have; business interruption insurance and technology errors and omissions (E&O) policies provide extra safeguards against unexpected liabilities.

3. Regular Risk Assessment:

Conduct regular risk analyses to detect any vulnerabilities and risks not covered by insurance and take proactive measures to address them. If you are living in Canada, we also have some Best Cyber Insurance Canada.


Q1: Does cyber insurance cover losses caused by social engineering attacks?

A1: It depends on your policy's coverage provisions for social engineering attacks - some might cover any associated losses while other policies might have certain conditions or restrictions that apply in such attacks.

Q2: Does cyber insurance cover reputational damage after an attack or breach?

A2: It typically offers coverage to help manage reputational damage after cyber incidents, however, the extent varies and should be discussed with your insurer in detail before making your decision.

Q3: Can my business claim against cyber insurance when hit by zero-day exploits?

A3: Claims related to zero-day exploits can be complex. While certain policies might cover these incidents, others might exclude coverage due to their unique characteristics. Review your policy terms and seek clarity from your insurer for clarification on this matter.

Your Vision, Your Choice!

At SummitCover, Cyber insurance provides vital protection from both financial and legal consequences associated with cyber incidents; however, its limitations must also be acknowledged in order to stay protected in an ever-evolving threat landscape. By becoming familiar with What does cyber insurance not cover, companies are empowered to take proactive steps toward mitigating risks and vulnerabilities more efficiently and comprehensive protection can be reached against them. 

By strengthening cybersecurity practices, taking on additional coverage options where available, and conducting regular risk analyses businesses can achieve comprehensive protection within an ever-evolving threat environment. If you have any doubts left, ask in the comment section! And read more about Cyber Liability Insurance Canada!


In conclusion, cyber security is a great way to offer financial safety for the firm and its clients, but a number of events fall under the category of what does cyber insurance not cover. This covers scenarios involving data loss, cyber extortion, and cyber liability, which is why it is critical that you thoroughly investigate the policy before making a purchase. Companies can make better judgments about how to safeguard their systems and data if they understand the restrictions of their cyber insurance policy. due to the difficulty of proving that the incident was caused by an outside actor rather than a human or technical fault. Companies should be aware of these exclusions and ensure that adequate safeguards are in place to defend against these potential hazards.  For more details visit Summit Cover.

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