Question 1

Why might a cyber policy exclude losses arising from a failure to maintain minimum security standards?

Accepted Answer

Insurers exclude losses from failure to maintain minimum security standards because coverage depends on the insured meeting basic cybersecurity requirements such as patching systems, using multi-factor authentication, or maintaining backups; if an insured neglects these basics and suffers a preventable breach, the insurer may deny coverage due to the insured's failure to satisfy policy conditions.

Question 2

What does 'claims-made' mean in the context of a cyber insurance policy, and how does it differ from an occurrence form?

Accepted Answer

A claims-made cyber policy covers claims reported to the insurer during the policy period regardless of when the breach occurred (subject to the retroactive date), while an occurrence form covers incidents that happened during the policy period regardless of when the claim is made; most cyber policies are written on a claims-made basis because cyber losses can be discovered long after the breach.

Question 3

What role does multi-factor authentication (MFA) play in cyber insurance underwriting, and what coverage consequences can arise without it?

Accepted Answer

Multi-factor authentication is a basic security control that significantly reduces unauthorized access risk; insurers increasingly require MFA for remote access and privileged accounts as a condition of coverage, and some policies include exclusions or premium surcharges for insureds that fail to implement it, potentially denying claims for breaches that MFA would have prevented.

Question 4

What are PCI-DSS assessments, and how are they different from government-imposed regulatory fines?

Accepted Answer

PCI-DSS assessments are fines imposed by payment card brands like Visa and Mastercard under private contractual arrangements with merchant banks, not by government regulators; unlike government fines, they arise from contractual obligations and are therefore generally insurable because public policy concerns about deterrence apply differently to private contractual penalties.

Question 5

How does a software-as-a-service (SaaS) company's liability exposure differ from that of a traditional software vendor, and how does Tech E&O address both?

Accepted Answer

A SaaS company continuously delivers services over the internet, creating ongoing liability for service outages, data loss, and performance failures that affect multiple clients simultaneously; Tech E&O covers both SaaS providers and traditional vendors for claims arising from service or product failures, including defense costs and client damages from downtime or errors.

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