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What is Cyber-Insurance?
Traditional 'brick and mortar' insurance policies do not address many of the major risks that corporations face in today's computer-driven information age. Cyber insurance policies do. Cyber-insurance provides companies and individuals with coverage for intangible exposures such as system disruption, lost or damaged data, invasion of privacy, and intellectual property infringement.
Privacy
Cyber-policies provide coverage for a broad range of invasion of privacy and identity theft claims, including coverage for blast-fax and FACTA liability. Whether through theft of credit card information or lost laptops, privacy claims are a major challenge for every company. While general liability policies offer some coverage for invasion of privacy, that coverage is narrow and disappearing.
IP Infringement
Cyber-policies provide coverage for all claims of intellectual property infringement except trade secret and patent. Most companies are exposed to claims for trademark, copyright or trade dress infringement. Here, too, general liability policies once offered some protection, but now mostly contain IP exclusions.
Corrupted Data
Current liability and property policies insure only tangible property, which does not include data. A company can lose data stored on computers either through a software glitch or a disgruntled employee. In one case, an employee who thought she was about to be terminated erased five years of work done by her employer, an architect. A cyber-policy would have paid for the cost of recreating that data.
Computer Disruption
The business interruption insurance that companies carry only protects against interruption with a physical cause. Cyber-policies broadly protect against any computer disruption, whether by a hacker or a software problem. Many companies that would never think of going uninsured for fire and other physical risks do not realize that potentially crippling cyber-exposures remain uninsured. Every company should examine its operations, determine the extent of such threats, and review the current market for cyber-insurance. Moreover, whenever the insurance industry has confronted a new wave of liability, it has responded by denying coverage. Whether under traditional or cyber-policies, insureds seeking coverage for the current wave of privacy, IP, data, and computer disruption claims can expect coverage disputes.
Lowenstein Sandler Cyber-Insurance Services
- We review traditional policies to determine if they still provide coverage for cyber-related claims.
- We perform audits of a company's cyber-risks and advise on appropriate cyber-policies.
- We advise companies on presenting these claims to their insurers.
- If insurers deny these claims, we sue for coverage.
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