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The digital landscape has changed the way companies operate today. This is partly because it only helps to keep up with the trends in each individual sector, and partly because companies are needing to stay ahead of the curve when it comes to cyber threats. Things like ransomware, phishing, and cryptojacking are developing and evolving at fast rates, putting an emphasis on protecting everything from sensitive data to financial assets.
As more companies are starting to invest in Cyber insurance to protect against the fallout of a data breach, the laws behind cyber insurance are changing quickly. Risk managers and counsel for companies should be sure to monitor these changes to find the best way to meet their companies’ needs in an increasingly digitally dependent world.
Cyber Insurance Today
Cyber risks are becoming increasingly dire in practically every sector. Data breaches and phishing attacks are starting to be more targeted as well as widespread, disrupting small businesses and large corporations alike. Essentially, no one is immune.
As companies begin to look to their cyber insurance coverage to cut down these risks, they should also look into what’s changing in the legal field when it comes to cyber insurance. Companies should be willing to work with a cyber insurance broker who can keep them abreast of any changes in the market and how they may affect their current cyber insurance coverage.
So far, most court decisions pertaining to cyber losses have to do with three separate lines of cyber insurance coverage including comprehensive general liability (CGL), crime/fidelity, and cyber insurance.
For CGL policies, these generally include personal and advertising injury liability insurance for injuries sustained on account of violations to someone’s right to privacy. Most courts have rejected coverage for cyber incidents under CGL policies.
Back in 2014, endorsements were issued by the Insurance Services Office, Inc., for use with CGL policies to clear up the fact that traditional CGL policies exclude cyber insurance coverage for many different cyber incidents.
Sometimes called a fidelity bond, crime insurance protects the insured party against a wide range of losses; things like fraud, embezzlement, and theft by others fall under this category. In recent years, courts have reached different results when it comes to determining coverage for losses related to cyber breaches under fraud provisions.
Courts are now counting newer threats such as social engineering (i.e. schemes that rely on human interaction to manipulate users into making security mistakes) as fraud as these claims could end up having a large impact on the line of coverage.
Currently, there isn’t a significant body of case law that interprets cyber insurance policies. These policies generally include first and third party insurance for data privacy and network security events.
In a 2015 decision from the US District Court for the District of Utah, under technology errors and omissions liability coverage, the insurer in the case had no duty to defend the insured against allegations that they acted with knowledge and malice.
These examples show how important it is to stay aware of the changing status of cyber insurance in a world dominated by constant cyberattacks and breaches that don’t seem to be letting up. The best thing to do is work with a cyber insurance broker to make sure all areas of a business can find proper coverage when dealing with highly sophisticated threats.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect, and gratitude to help our clients succeed and place business in specialized markets. For more information about our products or to become an agent, please contact us today at (855) 248-1480.