Surprise! Your cyber-risk insurance may not cover losses resulting from cyberwar. Here are some tips to help ensure you’re getting your money’s worth.
With the prospect of a cyberwar with the Islamic Republic of Iran somewhat looming, there is the prospect that private companies—particularly those in the “critical infrastructures” of banking and finance, telecommunications, transportation, health care and other sectors—may suffer direct or collateral damage as a result of the “tit for tat” that may occur when war turns cyber.
Depending on the motivations, capabilities and precision of the combatants, these cyberattacks may be nothing more than an annoyance, or they may be existential in their impact. Apart from the ordinary questions for businesses about whether these kinds of attacks can be prevented or mitigated, one question for entities potentially impacted would be, “Are they covered?” That is, Do the broad panoply of insurance products including GCL, D&O, data breach and cyber-risk insurance cover these kinds of attacks?
The simple answer is no. And yes. And maybe. In other words, there is no simple answer.
Quite frankly, one of the reasons for the confusion is the fact that we have almost no experience with potentially insured losses resulting from cyberwar. So the first step in deciding if there is coverage is to look at the terms of the policy.
To War, To War, Fredonia’s Going to War
Insurance companies typically insure against what might be called “ordinary” risks: you know—hackers, criminals, crooks, liars, cheats and stupidity. It is not uncommon, however, for even comprehensive insurance policies to have a number of exclusions from coverage. Among these exclusions are coverage for “acts of war”—damages or injuries resulting from ..
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