How secure password management helps you qualify for better cybersecurity insurance coverage

An increasing online footprint means more data for cybercriminals to exploit, and the numbers tell a sobering story. According to the Identity Theft Resource Center's 2024 Annual Data Breach Report, U.S. data compromises totaled 3,158 incidents, with cyberattacks accounting for 80% of breaches — many driven by compromised credentials that could have been prevented with strong password policies and multi-factor authentication. These incidents exposed more than 1.7 billion individuals to identity theft and fraud.

When breaches happen, the consequences are steep. Companies deal with reputational damage, customer backlash, revenue loss, and potential legal action. The average cost of a data breach reached $4.44 million globally in 2025, though U.S. organizations faced significantly higher costs at $10.22 million, according to IBM's Cost of a Data Breach Report, underscoring the importance of cyber insurance for business continuity.

Weak password practices compound the risk. The Bitwarden World Password Day Survey found troubling trends: a quarter of global respondents reuse passwords across 11-20+ accounts, while over a third use personal information in credentials that's publicly visible on social media and forums. These risky habits directly impact insurance eligibility and premium rates. Additionally, 30% resort to shadow IT solutions, a practice that can render cybersecurity insurance coverage ineffective. These habits directly influence how insurers evaluate organizational risk, since credential handling and access controls are core factors in underwriting decisions.

With high-profile breaches such as SolarWinds, Colonial Pipeline, and the MOVEit supply chain attack, businesses are increasingly viewing cyber insurance as essential. Cyber insurance adoption continues to grow as organizations recognize the financial protection it provides against disruptive and sophisticated attacks, making it a critical requirement rather than an optional safeguard. The good news is that there are steps businesses can take to protect themselves against the fallout of a data breach. 

The Federal Trade Commission outlines two primary forms of coverage: first-party coverage, which applies to an organization’s data and recovery activities, and third-party coverage, which applies to liability claims. First-party policies typically cover legal counsel, data recovery efforts, business interruption losses, and regulatory penalties. Third-party coverage addresses consumer notifications, claims, settlements, and forensic accounting costs. Modern policies increasingly include protection related to AI-driven phishing and social engineering incidents.

Here's the catch: finding an insurer willing to cover you requires proof of mature security practices. According to the Verizon 2025 Data Breach Investigations Report, 60% of breaches involve human error, including credential abuse (22%) and phishing (16%). With 60% of IT decision makers reporting a cyberattack in the last year, underwriting pressure has increased, and password managers are facing heightened scrutiny.

Password managers are now considered essential security controls by cyber insurers. Many providers require enterprise password management as a prerequisite for policy approval, and documented usage can influence premium assessments. 

61% of IT and cybersecurity leaders had to demonstrate password manager usage when applying for cyber insurance.

Bitwarden can help businesses qualify for cybersecurity insurance and support readiness in several ways:

• Generates strong, unique passwords that align with underwriting requirements and mitigates credential reuse risks identified among 72% of younger workforces.

• Enables secure access from any device, supporting remote and hybrid environments without relying on unmanaged credential handling. 

• Facilitates  secure password sharing while maintaining access records that support audit trails and compliance requirements.

• Standardizes strong password policies across the organization, reducing inconsistent or informal credential practices.

• Demonstrates  transparent security design through trusted  open source security, end-to-end encryption, and third-party audits for insurer review.

• Strengthens the organization’s security posture in ways that support more favorable policy terms during underwriting discussions.

92% of IT and cybersecurity leaders agree that password managers are essential to their organization's security strategy.

Using Bitwarden demonstrates the proactive security posture that cyber insurers increasingly require. With vault health reports and automated credential management, organizations can demonstrate to insurers that they have the visibility and control necessary to minimize password-related risks.

Ready to strengthen your position? Start with a free enterprise trial or free individual account today.