What is cyber insurance?
Cyber insurance is a policy that transfers part of the financial loss arising from cyber incidents — ransomware, business email compromise, denial-of-service attacks or a data breach — to an insurer in exchange for a premium. It complements security controls rather than replacing them: underwriters price the risk on the measures the insured can evidence, from multi-factor authentication and offline backups to regular penetration testing.
First-party and third-party cover
- First-party cover pays the insured’s own losses: digital forensics, incident response counsel, notification and call-centre costs, data restoration, business interruption and, where the policy and applicable law permit, ransom payments.
- Third-party cover responds to claims against the insured: customer and partner litigation, contractual indemnities and defence costs in regulatory investigations.
Exclusions decide what the policy is really worth. Watch for war and state-sponsored attack exclusions, known-incident carve-outs, and clauses that void cover where the insured failed to maintain the security measures declared in the proposal form.
The legal dimension
The proposal form matters as much as the wording: misrepresenting your controls can cost you the cover at the moment you need it most. Policies typically require prompt notice to the insurer, consent before admitting liability or paying a ransom, and use of panel forensic and legal vendors, so the policy must be reconciled with the incident response plan in advance. Ransom reimbursement is subject to sanctions screening, and administrative fines are treated as uninsurable in many jurisdictions on public policy grounds. Overlaps with cyber liability insurance, E&O and D&O programmes should be mapped to avoid double cover and gaps.
Turkish context
Turkish insurers offer cyber policies, frequently adapted from international wordings, and demand is driven above all by KVKK exposure: breach response costs, notification obligations and follow-on claims. Whether KVKK administrative fines can be insured is contested, and market practice generally excludes them. Turkish companies selling to EU and US customers also meet contractual requirements to carry minimum cyber limits, which makes the policy a sales enabler as much as a safety net.
Do: reconcile the policy with your incident response plan and document every control you declare to the underwriter. Don’t: assume fines, ransom payments or state-sponsored attacks are covered — read the exclusions before the incident, not after.
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