So You Think You Have Cyber Insurance…
With the increase in cyberthreats, companies are encouraged to develop robust cybersecurity strategies to prevent cyber assaults. But what happens when the cybersecurity strategy doesn’t work and the company is breached? Companies often turn to their cyber insurance or property insurance policies for coverage. But there’s a catch—insurance policies don’t always cover all breaches. The biggest gap is the act of war clause.
The act of war clause is often invoked when a company is hacked by a nation state like China, Russia, or North Korea. Recently, a large U.S. company was hacked by another nation. Coverage for losses caused by the malware attack was denied because the insurance company classified the attack as an act of war, which was excluded by their existing policy. The requesting company was liable for the damage inflicted by the hack.
Additionally, many companies are relying on outdated property insurance policies to cover cyber claims, even though terms and conditions have not been updated to reflect the increasing level of value in digital data instead of physical assets. Depending on property insurance policies poses a challenge because traditional property insurance policies were created to cover tangible damage, not theft of financial and customer information.
Our advice? Revisit your cyber insurance policies, or consider adding new policies to ensure all assets—not just physical—are covered, regardless of where the damage comes from.
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