Why foundational failures still cost companies, even when they’re insured

Cyber insurance is no longer a luxury. It’s a boardroom staple, a checkbox on every enterprise risk register. But most organizations are betting on a safety net that may not hold. Not because the threats are too advanced, but because the basics are too often ignored.

The False Comfort of Coverage

Cyber insurance policies are designed to reduce financial exposure in the event of a breach. But they’re not a blank check. Many organizations face partial payouts, delays, or outright denials.

Why? Because insurers often tie coverage to the presence and consistent execution of basic cyber security controls: multi-factor authentication, patch management, credential hygiene, and documented incident response. If these aren’t in place, or if they’re not enforced, the policy may not pay out.

The Real Threats Are Boring

The media loves a good cyber war story. Zero-days, nation-state hackers, and critical infrastructure attacks dominate headlines. But the data tells a different story.

According to the 2025 Verizon Data Breach Investigations Report:

  • 22% of breaches began with credential abuse
  • 20% were due to vulnerability exploitation
  • 16% started with phishing

Meanwhile, espionage and data destruction, the cinematic threats, accounted for just 2% of incidents (IBM X-Force).

These aren’t sophisticated attacks. They’re opportunistic. They rely on reused passwords, missed patches, and employees clicking on links they shouldn’t. And they’re exactly the kinds of threats insurers expect you to have under control.

The Confidence Trap

Here’s how the cycle plays out:

A company purchases cyber insurance. It feels protected and shifts focus to high-profile threats. Routine controls are neglected or inconsistently applied. A breach occurs due to a mundane vulnerability. The insurer denies the claim due to non-compliance with basic controls.

It’s a feedback loop of false confidence. The presence of a policy creates a sense of security that isn’t backed by operational discipline.

What Insurers Actually Look For

Insurers are becoming more prescriptive. Many now require evidence of cyber hygiene. And they’re not just asking at underwriting. They’re asking at renewal. They’re asking after an incident. And if the answers don’t match the policy disclosures, coverage can be reduced or denied.

One insurer’s policy wording notes that coverage may be affected if an organization fails to maintain “reasonable protection by security practices and systems maintenance procedures equal or greater to those disclosed in the proposal.”

The Mundane Menace Is Real

In our latest ebook, The Mundane Menace, we explore how the most damaging threats are often the ones that get the least attention. Consider this:

  • Credential harvesting accounted for 29% of compromises in 2024 (IBM X-Force).
  • The median time to remediate leaked secrets on GitHub was 94 days (Verizon DBIR).
  • Phishing infrastructure is now professional-grade, with cloned websites and impersonation campaigns that persist for weeks.

These aren’t theoretical risks. They’re the daily reality of modern cyber defense. And they’re exactly what cyber insurance assumes you’re already handling.

Resilience Starts With the Basics

The good news? These threats are preventable. But prevention requires more than tools, it requires discipline.

Credential monitoring works best when it’s continuous, not periodic. By staying ahead of leaked credentials, organizations can act swiftly and decisively, reducing risk before it escalates.

Phishing response is evolving too – it’s no longer just about spotting suspicious emails, but proactively identifying and removing impersonation domains and fake executive profiles.

When it comes to patching, the focus should shift from volume to value: prioritize vulnerabilities based on real-world exploitability and exposure and mitigate them quickly.

Cyber Insurance Is a Mirror, Not a Shield

Cyber insurance reflects your security posture. It rewards maturity and punishes negligence. It’s not a replacement for operational resilience,  it’s a test of it.

If your organization is betting on insurance to cover the fallout from a breach, make sure you’re not ignoring the very controls that determine whether that bet pays off.

Want to Know What Actually Causes Breaches?

Download our ebook, The Mundane Menace, to explore why the most damaging cyber threats are often the ones we ignore  and how to build resilience where it matters most.

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