As a business owner, comprehending the intricacies of your commercial insurance policy is paramount to safeguarding your enterprise against potential risks. While many businesses rely on standard coverage like a Business Owner’s Policy (BOP) or Commercial Package Policy (CPP), it’s crucial to understand the exclusions within these policies, especially concerning emerging threats like cyber risks.
The Standard Business Policy Dilemma
The conventional Business Owner’s Policy or Commercial Package Policy serves as a foundational insurance shield for businesses, offering coverage against various risks. However, a critical detail often overlooked is the exclusion of non-physical damage events. In the evolving risk landscape, cyber threats, including ransomware, hacking, and other cyber attacks, are at the forefront of potential dangers. Surprisingly, standard business policies typically do not cover such cyber risks.
The Legal Precedent: Ohio Supreme Court Case
A notable case in Ohio serves as a stark reminder of the limitations of standard business policies in addressing cyber risks. In this case, a company faced a ransomware attack where hackers demanded $35,000 for the release of their computer systems. The company complied, paying the ransom, and the hackers restored access without causing any physical damage. However, when the business sought reimbursement through its Business Owner’s Policy, the claim was rejected.
The Ohio Supreme Court ruled that the language of the policy explicitly excluded coverage for ransomware attacks as there was no physical damage. This legal precedent underscores the need for businesses to be vigilant about the limitations of their existing policies when it comes to cyber risks.
Navigating the Coverage Gap: Understanding Cyber Liability Policies
To address the gaps in standard business policies, businesses must explore dedicated cyber liability insurance. Cyber liability policies or endorsements to existing policies specifically cater to the intricate nature of cyber risks. These policies can encompass coverage for financial losses, legal expenses, and other liabilities arising from cyber attacks.
Consulting Your Insurance Professional
Understanding the complexities of insurance policies, especially concerning emerging risks like cyber threats, requires professional guidance. While we are not legal advisors or insurance agents, we strongly recommend consulting your insurance broker or agent to evaluate the adequacy of your existing coverage. Your insurance professional can provide insights into whether your current policy requires cyber liability endorsements or if a separate cyber liability policy is warranted.
Proactive Risk Mitigation in the Cyber Era
In an era dominated by digital advancements, businesses face unprecedented cyber risks that demand tailored insurance solutions. As a business owner, proactive risk mitigation involves staying informed about the limitations of standard policies and taking strategic steps to bridge potential coverage gaps. By understanding the nuances of your insurance coverage and seeking appropriate endorsements or separate policies, you can fortify your business against the evolving landscape of cyber threats.