Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Does Your Business Insurance Cover Cyberattacks?

Author: Scarinci Hollenbeck, LLC

Date: August 18, 2014

Key Contacts

Back

For many U.S. businesses, data breaches are inevitable. So while prevention is still important, it also pays to be prepared for the aftermath.

For those companies hoping to rely on commercial general liability (CGL) policies, it’s likely time to think again. While older policies were unclear regarding whether coverage existed for cyberattacks and data breaches, insurance companies are increasingly including policy language that expressly excludes these types of losses.

For example, the CGL policies issued by Insurance Services Office, Inc., which provides the form contracts used by many insurance providers, now contain exclusions for cyberattacks and other forms of data breaches. One such provision disclaims coverage for damages related to “access to or disclosure of any person’s or organization’s confidential information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information.”

While cyber insurance policies were once reserved for billion-dollar companies operating in high-risk industries, one in three businesses now carries insurance intended to cover data breach losses. According to New York insurance brokerage firm Marsh, LLC, the sale of cyber insurance polices increased 20 percent in 2013. The high-profile Target breach also convinced many companies that were debating such policies to take action.

As we have previously highlighted on this Business Law Blog, the costs of data breaches are skyrocketing. Ponemon Institute’s 2014 Cost of Data Breach Study found that the average cost of a data breach was $3.5 million last year, representing a 15 percent increase over 2012 figures. Accordingly, having insurance coverage to cover the costs of providing credit monitoring, defending potential lawsuits, and hiring crisis management professionals can be extremely valuable. Therefore, if your business currently relies exclusively on a CGL policy to provide comprehensive risk management, it may be time to explore your other options.

Part of my practice covers protecting businesses from pitfalls in their insurance coverage. Our firm also has a Cyber Security and Data Protection group, chaired by Partner, Fernando Pinguelo. If you have any questions about this post or would like to discuss your company’s insurance coverage, please contact me, Charles Yuen, or the Scarinci Hollenbeck attorney with whom you work. 

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Tariff Response Options for Small Businesses Facing Financial Distress post image

Tariff Response Options for Small Businesses Facing Financial Distress

The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]

Author: Brian D. Spector

Link to post with title - "Tariff Response Options for Small Businesses Facing Financial Distress"
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]

Author: Matthew F. Mimnaugh

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!