Cyber insurance or warranty – Which delivers better cybersecurity?

Cyberattacks are no longer a matter of if they will happen, but when. Many businesses have therefore bought themselves peace of mind through cyber insurance. But what if that security could come as part of the security service itself – and even include financial compensation if the worst should happen?

Felix Guggenheim of Arctic Wolf, one of the world’s leading companies in managed detection, response, and security operations services, has written a LinkedIn article. The article examines the difference between traditional cyber insurance and what’s known as a Security Operations Warranty. It not only explains how warranties work, but also how they can be a smarter alternative for many companies.

Read the article and see what separates insurance from warranty. Which is the best fit for your business?

The Dilemma

Imagine the following choice:

Option 1: You take out a fire insurance policy. If damage occurs, you receive 5 million, minus a large deductible. The insurance costs you 30,000 a year.

Option 2: You hire a fire safety expert who advises you on how to best secure your property, identifies risks, trains your staff, installs and monitors fire alarms around the clock, and attempts to extinguish the fire immediately if an alarm is triggered. If a fire still occurs, the expert will cover up to 3 million in damages. All of this costs the same as the insurance.

Does Option 2 sound like a good deal? Then keep reading, because this is now also available for cybersecurity.

Cyber insurance

Many companies have recognised that cyber risk is now one of the biggest threats to their business and want to protect themselves financially against the consequences of attacks. They take out cyber insurance, which typically covers:

First Party Coverage – Business interruption, recovery costs after attacks, ransom payments, etc.

Third Party Coverage – Liability claims for data breaches, legal assistance for compliance violations, PR and communication costs.

How much does it cost?

Premiums vary depending on industry and company size:

• A small company (annual turnover of 5 million) might pay around 2,500 per year for 1 million in coverage.
• A mid-sized company (annual turnover of 100 million) often pays 30,000–60,000 per year – for 5 million in coverage (minus deductible).

More requirements – no cost reduction

Cyber insurance does not reduce your cybersecurity costs, on the contrary. Insurers impose requirements that must be met in order to obtain or retain coverage:

• Multi-factor authentication (MFA)
• Regular backups
• Endpoint protection
• Employee security training
• Security testing
  and remediation of vulnerabilities
• For larger companies (250+ employees): a 24/7 Security Operations Center (SOC)

Paperwork – but little day-to-day value?

Small and medium-sized businesses often have to fill in extensive checklists (30–100 questions). Larger companies must undergo external assessments. This can have benefits, reducing disputes when claiming, but it can also be a heavy administrative burden.

The main drawback of insurance is obvious: you hope never to need it, meaning your premium disappears without any tangible day-to-day benefit.

To increase value, some insurers offer additional services such as:

• Employee training
• Access to incident response teams
• Digital forensics

However, this can backfire: if forensics uncovers security gaps that caused the incident, it may complicate the claims process.

Warranties from security Providers – An alternative

More security vendors are now offering warranties that provide customers with financial assurance, without a separate premium. These warranties are typically:

• Linked to the services purchased
• Not individually tailored
• Subject to certain requirements, such as security controls and procedures

For small and medium-sized businesses, this can be an attractive alternative or supplement to insurance.

Example: Arctic Wolf Security Operations Warranty

Customers who purchase Security Operations Total + Aurora Managed Endpoint Defense receive:

• Guidance to improve security measures and harden systems
• Modern endpoint protection, fully managed and maintained
• 24/7 monitoring of networks, endpoints, identities and cloud services
• Regular vulnerability scanning and patch recommendations
• Employee training and phishing simulations
• Guaranteed access to an experienced incident response team
• Preparedness planning tools

And: In the event of a security breach, compensation of up to USD 3 million is provided.

Requirements?

• Actively use the solution
• Patch vulnerabilities within 60 days
• MFA must be enabled
• Backups must exist
• Incidents must be reported within the set timeframe

These requirements are considered realistic in the industry.

Other warranties on the market

• Rubrik – From 250 TB subscription → Ransomware warranty of USD 250,000, up to 10 million
• CrowdStrike – From the first licence → Warranty up to USD 100,000, increasing for 5,000+ endpoints

The market is moving towards integrated security and warranty solutions.

The message:
"We protect you – or we pay."

Our conclusion 

Felix Guggenheim’s article makes it clear that organizations should no longer view cybersecurity purely through the lens of insurance. Traditional cyber insurance can provide financial relief after an incident, but it comes with strict prerequisites and does nothing to improve day-to-day security. Warranties like Arctic Wolf’s Security Operations Warranty go further by combining continuous protection, expert response, and financial coverage in a single package.

For Norwegian businesses, the choice is no longer simply “insurance or warranty,” but finding the most effective combination:

• Cyber insurance from Norwegian providers offers valuable support after incidents and often fulfills regulatory requirements.
• These policies typically come with strict conditions: businesses must have reliable backups, up-to-date endpoint protection, incident response plans, and in some cases, documented operation of a SOC or equivalent monitoring solution.
• The requirements are also increasing due to national and international regulations (such as NIS2, the Digital Security Act, DORA, and GDPR), which often mandate monitoring, logging, and incident handling capabilities.

Our recommendation is clear: prioritize solutions that deliver ongoing security value, whether through warranty-based services or managed security operations (SOC, IR teams, etc.), and use insurance to cover residual or systemic risks. Ensure the terms and definitions in your agreements are aligned, and seek professional advice to identify coverage gaps. By combining prevention with resilience, your organization can stay one step ahead, both technically and financially.