Risk Management
Advisors 


Contact us today
714.841.5830
Home Page

 

 

 

Business Interruption Increasingly Key Part of Cyber Insurance

As the full threat of hacking and cyber attacks takes hold, cyber insurance policies are evolving so that the primary focus is on business interruption coverage.

When these policies first hit the market, they were mostly focused on covering the costs of notifying individuals whose personal data or credit card information may have been exposed, to any regulatory penalties and other compliance costs.

But many companies, when hacked, suffer far more damage to their operations, including websites or important systems being rendered unusable.

The larger danger to companies seems to be system failures resulting from a variety of novel attacks, including

  • Denial of service
  • Brute force (an attack aimed at obtaining passwords)
  • Malware or malicious code
  • Ransomware
  • Backdoor attacks
  • Social engineering. 

Business interruption policies have been around for a while, but they have typically focused on disruptions caused by supply chain issues and natural catastrophes that render businesses unable to operate. Often these interruptions can last for weeks or even months.

The downtime for a business that's been hit by a cyber attack is usually much shorter - a few days to a few weeks at the most.

Also, property policies or traditional business interruption policies have not extended property loss or damage to electronic data, as data is not considered a physical or tangible object subject to loss or damage. Damage is triggered by a direct physical loss or damage.

Meanwhile, business interruption in a cyber policy is triggered by an electronic event such as a cyber attack, or hacking.

For cyber business interruption coverage to be triggered, there must usually be a direct link between a cyber attack and the interruption of business or a loss of sales. For example:

  • Criminals destroy data or alter a website's or database's code in order to freeze or render the computer system or website unusable.
  • A denial-of-service attack renders a website inaccessible to customers and users.

A business interruption claim would not be triggered, however, if a hacker gained access to your database and rooted around for important company information and operations were not hampered and there was no loss of revenue.

Typical business interruption provisions in cyber policies

  • The policy will include a maximum payout for business interruption claims under the policy. This caps the payout under the policy.  The cap may apply to each individual event or it may be an annual limit.
  • Policies may include a separate deductible for business interruption claims.
  • Policies may include a specific waiting period of hours or days before it kicks in to pay a claim. If the event causes losses or a disruption that lasts less than the waiting period, the claim would likely not be paid.
  • Policies usually will only pay for business interruption during the period that the company restores its systems.

Coverage usually includes a number of exceptions, like not covering third party liability, fines and penalties and the costs of restoring a network.

Most policies include exclusions as well, like loss of market or damage to computer systems caused by fire or other physical events that were not related to a cyber attack.

For more information, please call us. We are happy to answer any questions you may have.

Posted 12:35 PM

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version
Request A Quote






Refer Referrals
We love referrals! And thank you even more for your continued business.
Policies Customer Service
Self policy service any time of the day, directly from our website.
Newsletter Join Our Newsletter
Stay in touch with the latest events, news and offers we have.
Our Office Connect With Us

Main Office

7755 Center Ave Suite 1100
Huntington Beach, CA 92647

Maps & Driving Directions...

Contact Us Today!

PH: 714-841-5830
FX: 714-841-5831

Our Employee Directory
  Facebook LinkedIn