As a result of the ongoing COVID-19 (commonly referred to as the Coronavirus) pandemic, there has been increased interest and demand to secure cyber liability insurance coverage.  With the increase of volume of businesses that have switched to some form of a work from home structure, there has also been an increased volume of phishing, ransomware or other social engineering scams, as well as concerns over data related to COVID-19.  Further, businesses have realized that cyber-related losses are most likely excluded under traditional general liability and property policies, and have focused in on analyzing potential exposures and cyber risk management.

On the positive side, the cyber insurance market is competitive with carriers working to offer coverages to meet businesses’ needs.  Unlike other coverages, cyber liability insurance carriers offer guidance on preventing cyber incidents, such as employing technical security practices and internal back-up and recovery policies.  This knowledge is based on experience gained from insurers’ responding to voluminous cyber claims.  And these preventative measures work in conjunction with policy coverages in the event of a cyber claim.

However, there still can be a number of limitations included in cyber liability policies and coverage varies greatly amongst policies.  There is no standard form of cyber insurance coverage and it is important to keep in mind that the specific terms and conditions of the insurance policy itself will dictate whether there is coverage or not for a particular loss.  As we have recently noted, areas of coverage concerns may include:

• Limited or no coverage for cyber incidents arising from computer hardware that it is not owned by the insured, such as employee’s personal laptops, tablets and other devices.
• Limited or no coverage for social engineering claims such as funds transfer fraud situations.

Why Does This Matter For Businesses

• If you are considering securing a cyber liability insurance policy, have the form policy as well as applicable endorsements reviewed by an experienced cyber insurance coverage attorneys that can identify and understand all available coverages and limitations.
• Such a review should be conducted without delay and prior to binding coverage to confirm that you will actually have the coverage you want to secure during this pandemic.
• Once a cyber liability policy is bound, have the issued policy as well as other company insurance policies reviewed by an experienced cyber insurance coverage attorney to understand how all insurance policies interact with one another and identify potential coverage gaps.
• For California businesses, ensure that any cyber liability policies addresses requirements related to the California Consumer Privacy Act of 2018 (CCPA) (effective January 1, 2020, with the July 1, 2020 date for enforcement action quickly approaching.

For additional information, you can consult with a Task Force attorney Task by emailing NDCovid19Response@ndlf.com or contact our office directly at 949-854-7000.