How Cyber Insurers Investigate Claims: An Insider’s Guide to the Process

By Robert Delgado - Former Cyber Claims Investigator & Forensic Accountant

For 11 years, I investigated cyber insurance claims for two of the largest carriers in the market. I’ve reviewed over 800 claims ranging from $15,000 phishing incidents to $47 million ransomware attacks. I’ve approved claims that seemed questionable and denied claims that seemed straightforward.

Now that I consult for policyholders, I realize how little businesses understand about what happens after they file a claim. The investigation process is methodical, thorough, and—if you’re not prepared—potentially adversarial.

Here’s exactly what happens when you file a cyber insurance claim, what investigators look for, and how to position yourself for the best outcome.

The Claims Investigation Timeline

Day 1-3: Initial Intake and Triage

When your claim comes in, here’s what happens immediately:

Hour 1-4: Claim Registration

• Claim assigned a number and entered into system
• Policy pulled and coverage verified
• Breach hotline engagement recorded
• Initial severity assessment

Hour 4-24: Adjuster Assignment Based on claim characteristics:

• Routine claims ($50K-$250K): Staff adjuster
• Complex claims ($250K-$1M): Senior adjuster
• Major claims ($1M+): Specialized unit with outside experts

Day 1-3: First Contact Your adjuster will:

• Introduce themselves and explain the process
• Request initial documentation
• Confirm breach coach and forensics engagement
• Set expectations for timeline

Week 1-2: Evidence Collection

What We Request (Standard):

1. Complete incident timeline
2. All communications about the incident
3. Forensic investigation reports
4. Financial documentation of losses
5. Proof of business interruption impact
6. Notification costs and documentation
7. Legal invoices and communications

What We’re Evaluating:

• Is this a covered event under the policy?
• When did the incident actually occur (vs. when discovered)?
• What caused the incident?
• What was the scope of impact?

Week 2-4: Investigation Deep Dive

This is where we dig into the details:

Application Comparison We pull your original application and compare:

• Security controls you claimed to have vs. forensic findings
• Revenue figures vs. actual business interruption claims
• Employee count and data handling practices

Timeline Reconstruction We build a detailed timeline:

• When did attackers first gain access?
• When was the attack discovered?
• When was the insurer notified?
• What actions were taken and when?

Loss Verification For each claimed loss category:

• Is there documentation supporting the amount?
• Is this loss actually caused by the cyber incident?
• Is this type of loss covered under the policy?

Week 4-8: Coverage Determination

Based on our investigation, we make recommendations:

Clear Coverage: Claim processed normally Coverage Questions: Additional investigation or legal review Potential Denial: Escalation to special investigations unit

Week 8+: Resolution

For approved claims:

• Partial payments may be issued during investigation
• Final payment upon completion
• Reserves adjusted based on actual costs

For disputed claims:

• Reservation of rights letter issued
• Additional documentation requested
• Potential denial letter with specific reasons

What Investigators Actually Look For

1. Application Accuracy

The Big Question: Did you accurately represent your security posture on the application?

What We Check:

• MFA claims vs. actual implementation
• Backup procedures claimed vs. actual backup status
• Security training claimed vs. records
• Patch management claims vs. vulnerability scan dates

Red Flags:

• Claiming MFA on application, but forensics shows MFA wasn’t enabled
• Claiming regular backups, but backups were 6 months old
• Claiming security training, but no training records exist

Why This Matters: Material misrepresentation can void the entire policy. This is the #1 reason for claim denials that I’ve seen.

2. Policy Compliance

The Big Question: Did you comply with policy requirements?

What We Check:

• Notice timing (did you report promptly?)
• Pre-authorization for expenses
• Use of approved vendors
• Cooperation with investigation

Red Flags:

• Paying ransom before calling insurer
• Hiring your own forensics firm without approval
• Delayed notification (especially if you tried to “handle it internally”)
• Incomplete or inconsistent information

3. Causation

The Big Question: Was this loss actually caused by a covered cyber event?

What We Check:

• Chain of causation from incident to loss
• Separation of cyber-caused losses from other business issues
• Pre-existing conditions that may have contributed

Red Flags:

• Business interruption claims that exceed what the incident could have caused
• Revenue declines that started before the incident
• Losses that seem opportunistically attributed to the cyber event

4. Loss Documentation

The Big Question: Is the claimed loss amount accurate and documented?

What We Check:

• Financial records supporting claims
• Invoices and receipts for expenses
• Methodology for business interruption calculations
• Third-party verification where possible

Red Flags:

• Round number estimates without supporting detail
• Expenses that seem inflated or unnecessary
• Business interruption claims without baseline revenue data
• Missing documentation for significant expenses

The Forensics Report: What Insurers Focus On

When forensic investigators deliver their report, here’s what I zeroed in on:

Initial Access Vector

How did attackers get in? This reveals:

• Whether the incident is covered (some attack types excluded)
• Whether security control claims were accurate
• Potential negligence or failure to maintain controls

Dwell Time

How long were attackers in the network before detection?

• Longer dwell time = questions about detection capabilities
• May affect retroactive date coverage
• Impacts scope of potential data exposure

Data Exfiltration Evidence

Was data actually stolen vs. just encrypted?

• Affects notification obligations
• Impacts third-party liability exposure
• May trigger different coverage sections

Root Cause Analysis

What fundamentally allowed this to happen?

• Security control failures
• Human error
• Technology vulnerabilities
• Third-party compromise

Business Interruption Claims: The Toughest to Prove

Business interruption claims receive the most scrutiny. Here’s why and what we look for:

The Calculation Challenge

You claim: “We lost $500,000 in revenue due to the incident.”

We ask:

• What was your revenue during the same period last year?
• What was your projected revenue this period (before the incident)?
• How much of the decline is directly attributable to the incident?
• Would you have actually earned that revenue absent the incident?

Documentation Requirements

Strong BI claims have:

• Historical revenue data by day/week/month
• Revenue projections made before the incident
• Clear timeline of when systems were down
• Evidence of customer impact (cancelled orders, delayed projects)
• Mitigation efforts documented

Weak BI claims have:

• Estimates without supporting data
• Attribution of all revenue decline to cyber incident
• No historical comparison data
• Missing documentation of operational impact

Common BI Claim Issues

Overlap with Other Factors:

• Was business already declining?
• Were there other disruptions (supply chain, market conditions)?
• Did you lose customers for reasons unrelated to the incident?

Calculation Methodology:

• Gross revenue vs. net revenue
• Fixed costs vs. variable costs
• Continuing expenses vs. saved expenses

How to Prepare for a Claims Investigation

Before an Incident (Now)

Document Everything:

• Security control implementation dates
• Training attendance records
• Backup test results
• Patch management logs
• Vendor security assessments

Maintain Accurate Records:

• Revenue by day/week/month
• Customer contracts and commitments
• Operational metrics
• IT configuration documentation

Review Your Application:

• Pull a copy of your signed application
• Verify all statements are currently accurate
• If anything has changed, notify your broker

During an Incident

Call the Insurer First:

• Before taking any action
• Before paying any ransom
• Before hiring outside vendors
• Before making public statements

Document the Timeline:

• What happened when
• Who discovered what
• What decisions were made and why
• All communications

Preserve Evidence:

• Don’t wipe systems
• Don’t delete logs
• Don’t destroy emails
• Let forensics guide evidence preservation

During the Investigation

Be Responsive:

• Answer requests promptly
• If you need time, communicate that
• Don’t let requests sit unanswered

Be Accurate:

• Verify information before providing
• If you don’t know, say so
• Correct any errors immediately

Be Organized:

• Create a claims file
• Log all communications
• Track all expenses
• Retain all documentation

Red Flags That Trigger Enhanced Scrutiny

When I saw these factors, I dug deeper:

Application Red Flags

• Application completed hastily or with many “unknown” answers
• Security controls claimed seem inconsistent with business size
• Recent policy changes before incident

Incident Red Flags

• Delayed notification to insurer
• Inconsistencies between initial report and forensic findings
• Attempts to limit scope of forensic investigation
• Key employees unavailable for interviews

Claim Red Flags

• Round number estimates
• Claims that seem disproportionate to business size
• Missing documentation
• Changing story as investigation progresses

Financial Red Flags

• Company was in financial distress before incident
• Business interruption claim exceeds historical revenue
• Timing of incident coincides with business challenges
• Insurance increase shortly before incident

What Happens When Coverage is Disputed

Reservation of Rights Letter

If we identify potential coverage issues, you’ll receive a “reservation of rights” letter. This means:

• We’re continuing to investigate
• We’ve identified potential issues
• We reserve the right to deny based on these issues
• Coverage determination is not final

Your response: Take this seriously. Engage your broker and potentially independent counsel. Respond to all requests. Address the identified issues directly.

Examination Under Oath (EUO)

For significant disputes, we may request an EUO—a formal, recorded statement under oath.

What to expect:

• Conducted by insurer’s attorney
• Your attorney can be present (and should be)
• Questions about the incident, your security practices, the claim
• Transcript becomes part of claim record

How to prepare:

• Review all documentation
• Discuss with your attorney beforehand
• Answer truthfully and precisely
• Don’t volunteer information not asked

Denial and Appeals

If your claim is denied:

• You’ll receive a written denial with specific reasons
• You have the right to appeal
• Many denials can be overturned with additional information
• Independent appraisal or arbitration may be available
• Litigation is a last resort

Claim Success Factors

After 800+ claims, here’s what separates successful claims from problematic ones:

What Successful Claimants Do:

1. Call insurer immediately upon discovering incident
2. Use approved vendors for forensics and legal
3. Document everything as it happens
4. Respond promptly to all requests
5. Maintain accurate records throughout
6. Communicate proactively about issues or delays

What Problematic Claimants Do:

1. Delay notification to “assess the situation”
2. Hire their own vendors without approval
3. Provide incomplete information hoping issues won’t be found
4. Respond slowly or incompletely to requests
5. Change their story as investigation progresses
6. Become adversarial with the adjuster

Building a Relationship with Your Adjuster

Remember: Adjusters are people with discretion. A good relationship doesn’t guarantee approval, but it helps ensure fair treatment.

Do:

• Be professional and responsive
• Acknowledge their requests promptly
• Provide organized documentation
• Ask questions if you don’t understand
• Keep them updated on developments

Don’t:

• Be adversarial from the start
• Assume they’re trying to deny your claim
• Ignore their communications
• Provide information piecemeal
• Make threats about lawsuits or bad press

Summary: Preparing for Claims Success

Related Reading

• Cyber Insurance Claims Process - The full process explained
• Cyber Insurance Claims Denied - How to avoid denial
• First 24 Hours After a Breach - Immediate response guide
• Cyber Insurance Application Tips - Getting the application right

Understanding the investigation process helps you prepare for it. The best claims outcomes happen when policyholders are honest, responsive, and well-documented from day one. There’s no trick to “beating” an investigation—just be truthful and thorough.