What Is and Is Not Covered by Cyber Insurance?

In today's digital era, the threat of cyber attacks is a constant concern for businesses. A data breach or hacking incident can lead to substantial financial losses, reputational damage, and legal consequences. To mitigate these risks, many companies invest in cyber insurance policies that provide coverage for various cybersecurity-related incidents. However, disputes can arise regarding what is and is not covered by a cyber insurance policy. By understanding what these policies address, business owners can take steps to address and resolve cyber insurance disputes.

Coverage Provided by Cyber Insurance Policies

Cyber insurance policies are designed to protect businesses from the financial impact of cyber attacks, hacking, and related concerns. These policies typically offer coverage for:

1. Data breaches

   In the event that sensitive customer information such as Social Security numbers or credit card details are exposed or stolen, cyber insurance can help cover the costs associated with notification expenses, credit monitoring services for affected individuals, and any necessary public relations efforts.

2. Hacking

   If a business falls victim to a malicious hacker who gains unauthorized access to computer systems or networks, cyber insurance can provide coverage for forensic investigations to determine the extent of the attack. It may also include funds to restore compromised systems and implement new security measures.

3. Ransomware attacks

   If an organization becomes a target of criminals who demand payment in exchange for releasing encrypted files or restoring access to crucial systems, cyber insurance may cover both ransom payments (where permitted by law) and costs related to mitigating future attacks.

4. Business interruption losses

   Cyber incidents often result in significant downtime as organizations scramble to contain breaches and recover their operations. Business interruption coverage offered under a cyber insurance policy can address lost income during this period.

5. Legal expenses

   Cyber incidents can lead to lawsuits from affected customers or regulators. Cyber insurance policies may cover legal fees, settlements, and judgments arising from these claims.

6. Public relations and crisis management

   Reputational damage is a considerable concern after a cyber incident. Cyber insurance can address the costs of crisis management services, public relations efforts to rebuild trust, and communication expenses.

Exclusions from Cyber Insurance Policies

Cyber insurance policies also have limitations and exclusions regarding what they will not cover. While policy terms may vary, some common exclusions include:

• Bodily injury claims

  Most cyber insurance policies do not cover physical harm resulting from cyber events. If a cybersecurity breach directly causes bodily injury or death (such as when medical devices are compromised), liability for these losses falls outside the scope of traditional cyber insurance coverage.

• Pollution/theft of trade secrets

  Damage caused by pollution resulting from the release of harmful substances into the environment or the theft or loss of trade secrets typically falls outside the realm of cyber insurance coverage, as these issues are beyond the scope of typical data security concerns.

• Internal breaches or violations

  Cyber insurance generally will not cover situations where an employee was responsible for a data breach or attack or when company personnel violated laws or regulations.

Contact a Chicago Cyber Insurance Dispute Mediation Professional

When disputes arise regarding what issues are covered by cyber insurance, determining how to resolve these concerns can be complicated. At Privacy & Technology Mediation Services, our Illinois data security dispute resolution attorney can help the parties in these disputes understand the best ways to address issues related to data breaches and cyber attacks while ensuring that the financial interests of all parties are protected. We can work with insurers and insureds located throughout the United States. Contact us at 312-767-3900 to learn more about our mediation services.