Uncovered: Why Your Business Insurance Won't Shield You from Cyber Losses

The Expert Podcast

Understanding Business Insurance Exclusions:

• For business owners, it's crucial to grasp significant details about standard commercial insurance policies.
• Most business owners hold a policy known as a BOP (Business Owner's Policy), or sometimes a CPP (Commercial Package Policy).
• These commercial insurance policies come with various exclusions from coverage, which are vital to comprehend.

Cyber Risk Exclusions:

• One of the critical exclusions in standard coverage is the omission of non-physical damage.
• When assessing risk profiles for the current and future years, cyber risk emerges as one of the largest threats.
• Cyber risks encompass ransomware attacks, hacking, and other cyber threats.
• However, a standard business owner's policy does not cover such risks.
• Separate cyber liability policies or endorsements to existing BOPs are necessary to mitigate cyber risk.
• Legal Precedent: A case in Ohio underscored the importance of cyber liability policies. A company faced a cyber attack, resulting in a ransom demand of $35,000.
• Court Ruling: The Ohio Supreme Court ruled that the business owner's policy did not cover ransomware since there was no physical damage.
• Despite paying the ransom and regaining access to their systems, the company's insurance claim for $35,000 was rejected.

Key Takeaway: It's crucial to understand that cyber risks, including those arising from ransomware attacks, might not be covered under standard business insurance policies.

Action Step: Business owners should review their policies carefully. While we're not legal experts or insurance agents, consulting with your broker or agent can help clarify coverage gaps and identify essential cyber insurance options. And visit at RiskCoverage.com for additional resources.