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May 04, 2016

Mind the gap between Cyber events and Non-Cyber coverages

Insurance Product Losses Covered Potential Coverage Gaps for Cyber-Related Claims
Property Physical asset damage (1st party) Newer polices contain exclusions removing cyber-attacks from coverage Damage to data is not covered, as “data” is not a tangible property. However, claimed or actual damage to computers, internal computer parts, or servers could be covered. Being hacked does not appear to fit in any of the coverage sections. Courts are in debate on whether cyber-crime against personal information is a “personal injury.” Professional Liability
General Liability Liabilities for physical damage to property, bodily injury, advertising injury, personal injury (3rd party) Physical damage to property must be plead and proved for coverage; data is not tangible property.
E&O Liabilities arising from the performance of professional services (3rd party) Courts are in debate on whether email phishing scams against law firms regarding collections and transfer to foreign bank accounts are “professional services.” Whether funds were “misappropriated” under the terms of EO/PL policies depends on what court your case is in.
Business Interruption Lost revenues and other costs incurred (1st party) Traditional policies do not cover cyber-attacks that do not cause physical damage.