Insurance Industry Buzzes Over Data Breach Ruling
The market for cyber liability insurance is expected to increase dramatically as businesses become more aware that their current policies don't adequately cover cyber-risks.
If the rash of data breaches in recent months has done anything for businesses, it’s raised their awareness of cyber liability insurance.
The market for cyber liability insurance is expected to increase dramatically as businesses become more aware that their current policies don’t adequately cover cyber-risks, according to the National Association of Insurance Commissioners.
However, a three-judge federal appeals panel last week threw into question just how inadequately existing insurance products cover cyber-risks.
Portal’s Pleasant Surprise
The case before the appeals court involves a class-action lawsuit about a data breach at Portal Healthcare Solutions.
Portal has a form of insurance that’s de rigueur for most businesses called a “commercial general liability policy.” It’s a kind of umbrella policy that’s supposed to cover a variety of unforeseen mishaps.
Portal argued that its CGL policy, issued by Travelers Indemnity, should cover the court costs of the data breach lawsuit.
A lower court agreed with Portal, and the appeals court agreed with the lower court.
What makes the decision important, particularly for small businesses that may not be able to afford cyber liability insurance, is that they may have some data breach coverage that they didn’t know they had.
That could cover some gaps in existing coverage, too. Although 64 percent of companies have already gone the cyber liability route, many small breaches fall below policy deductibles, leaving companies to pick up the tab, according to a survey released last month by Advisen.
Read More From the Original Article
Article Credit: John P. Mello Jr.
Risk Consulting Resources
If the rash of data breaches in recent months has done anything for businesses, it's raised their awareness of cyber liability insurance.
Leverage the breadth and depth of our education, experience and vision to deliver solutions to you.