Why Cyber Insurance Alone Won’t Protect Law Firms (and What Carriers Really Want to See)

Cyber insurance used to feel like a safety net for law firms. Pay your premium, sign the policy, and if something happened, you had backup. But that landscape has shifted. Today, carriers are tightening requirements, raising premiums, and in some cases denying claims outright.

Don't let your next cyber incident go without coverage.

The reason is simple: law firms are high-value targets, and carriers want proof you’ve taken cybersecurity seriously before they take on your risk. Here’s what’s driving the change and what firms can do about it.

The Wake Up Call

Carriers aren’t rubber-stamping policies anymore. They’re asking pointed questions:

• Is multi-factor authentication (MFA) enforced across every login?

• Is client email encrypted end-to-end?

• Who monitors your systems after hours?
  

If the answer is “no,” firms face higher premiums or no coverage at all. Insurance is becoming proof-based, not promise-based.

A Real-World Example

One mid-sized firm thought they were covered after purchasing a cyber insurance policy. Then a phishing attack cost them $120,000. When they filed a claim, it was denied.

The reason? MFA was only applied to partners, not staff. The carrier labeled that “insufficient security.”

This wasn’t negligence. They had a control in place, just not firmwide. But in today’s market, a gap that small is all it takes for a claim to be rejected.

The Financial Squeeze

Weak security doesn’t just increase the likelihood of a breach. It raises the ongoing cost of coverage. Carriers are imposing:

• Premium hikes up to 200%

• Higher deductibles

• Lower payout caps
  

In short: missing controls = higher risk rating. And a higher risk rating means you’re paying more, even before an incident occurs.

Busting the Myth

Myth: “If we have cyber insurance, we’re covered.” Reality: Cyber insurance is a backstop, not a shield.

According to the American Bar Association,¹ many firms assume cyber insurance will cover them—without realizing the strict security controls now required.

Carriers are in business to minimize their losses. If your IT stack doesn’t meet their checklist (MFA, patching, firewalls, monitoring), they can reduce payouts, delay claims, or deny coverage.

The Law Firm Gut-Check

If you’re a managing partner, ask yourself:

• Do you know if email encryption is enforced firmwide?

• Do you know who has admin rights to your systems?

• When was the last phishing drill run at your firm?

• Are all systems patched and monitored regularly?
  

If you can’t answer confidently, neither can your carrier. The good news: addressing these gaps isn’t always about expensive tools. It’s about disciplined IT practices.

The Bigger Picture

Cyber insurance should complement your risk strategy, not replace it. Secure file sharing, document retention policies, and client confidentiality protections all matter.

And here’s the truth: insurance doesn’t protect your reputation. Clients don’t care if you were reimbursed. They care that their sensitive information was exposed in the first place.

From Compliance to Resilience

The conversation has shifted. Carriers now ask: “Can you prove you’re worth insuring?”

Law firms that treat security as a compliance checkbox will keep getting squeezed. Those that build it into culture will not only reduce their risk but also negotiate better coverage terms.

This isn’t about ticking boxes. It’s about building resilience.

Takeaway for Law Firms

Cyber insurance is important, but it’s only part of the puzzle. Layered security, firmwide enforcement of controls, and clear IT management practices are what truly protect both your clients and your coverage. Learn how our Cybersecurity Services for Law Firms help meet insurance carrier requirements and prevent costly gaps in coverage.

👉 For a deeper dive, download our free guide: Cybersecurity for SMBs. It lays out the top 10 controls carriers want to see and how firms can implement them without breaking budgets.

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¹https://www.americanbar.org/groups/law_practice/publications/law_practice_magazine/2019/MA19/McCoy/