Cyber Risks and Insurance Coverage Decisions 2015-2019
Advisen
Cyber Risks and Insurance Coverage Decisions 2015-2019
By Vincent Vitkowsky, Gfeller Laurie LLP
The Internet is the most dynamic engine for economic growth in the world today, and cyberspace is the most dynamic domain. It is also a vortex of risks, including ransomware, cyber extortion, network interruption, data breaches, lost data, lost software, disabled hardware, cryptomining losses, and liability from websites and social media. Deceptive funds transfers and bitcoin theft have also been drawn into the mix.
Before the development of the cyber insurance market, insurance policies either excluded cyber risks, or more commonly, were silent on whether they covered them. Now, many insurance polices cover some — but not all — cyber risks.
The law of cybersecurity, privacy, and related insurance coverage is just beginning to emerge. The last five years have seen an increasing number of disputes concerning what specific risks and losses might be covered under particular lines of business. Prior to this modern era, there were only a few reported decisions, mostly addressing whether lost data, software and hardware, or business interruption losses, were covered under CGL or property policies. The results were mixed. There was a single known case seeking coverage under CGL Coverage B for one of the Sony data breaches, in which the holding of a New York lower court judge, denying coverage, was simply stated at the end of a lengthy hearing transcript.
In the modern era encompassed in this Survey, there have been numerous reported decisions, many carefully reasoned, under CGL, Businessowners, Computer Fraud and Crime, Financial Institution, Cyber, D&O, and even Homeowners policies. Many of those decisions are described herein. They demonstrate that the law of insurance coverage for cyber risks will also be dynamic, addressing many novel, challenging, and knotty issues in the years ahead.
About the author: Vince Vitkowsky is a partner in Gfeller Laurie LLP, resident in New York. He focuses on cyber risks, liabilities, insurance, and litigation. Vince assists insurers and reinsurers in product development, including manuscript policies and endorsements, and in all aspects of coverage evaluation and dispute resolution across many lines of business, including cyber, CGL, property, and professional liability. He also assists in complex claim evaluations, and if necessary, the defense of insureds in complex matters.
