Covering the Cyber Risk

General: What is Cyber Risk? 

Data breach, Personally Identifiable Information (PII), corporate data, etc.

Real World Impact

Examples of prominent cyber risks (hacking/theft i.e., Target Breach – 140+ lawsuits against Target; Tricare – stolen tapes; or other examples).

 

Traditional Insurance – How Cyber is Addressed in Traditional Policies 

Traditional policies cyber overview: CGL, D&O, Professional, Crime, etc.

CGL: 

Coverage A: “property damage” 

• Case Ex: Although case law allows for argument that cyber data losses constitute property damage for purposes of Coverage A, insurers have endorsed the policy to change the definition of “property damage” to explicitly not include electronic data or added exclusions to exclude coverage relating to electronic data. 

Coverage B: the publication debate

• What constitutes publication for purposes of meeting the definition of “personal and advertising injury.”
• PII/Data Exclusion

Professional Liability:

• Insuring Agreement (A): Professional Services Wrongful Act.
• Ensure proper scope.
• Avoid exclusions that fail to reflect risk.

D&O:

• Scrutinize the legal basis for liability.

Crime: 

• Tangible property issue – does not contemplate fraudulent transfers or computer-initiated instructions to transfer funds or securities.
• Crime policies typically include provisions that cover a “Loss which the insured shall sustain resulting directly from . . . The theft of any Insured property by Computer Fraud.” They also include provisions as the one above that afford coverage for computer fraud and fraudulent transfer of funds.

First Party Property

• Is there physical injury?
• Be on the lookout for extensive exclusions.
• Electronic Data Processing Equipment, Data & Media Coverage (Endorsement).   

Cyber Insurance     

• Why Isn’t Dedicated Cyber Coverage purchased? (Assumption it’s covered under other policies)
• Risks of losing records/data – or risks to businesses 
• Available products
• What does cyber insurance cover? 
  • Third Party: privacy/network liability, regulatory liability, media liability, etc. 
  • First Party: theft and fraud, crisis management, business interruption, data restoration, etc. 
  • Privacy Coverage/Crisis Management Expense
• Procurement strategies 

Speakers

Tracy Saxe, Esq., Saxe Doernberger & Vita, P.C

Rachel S. Pearson, Esq., Saxe Doernberger & Vita, P.C