Cyberbullying: Possible Denial Of Insurance Coverage

As cyberbullying increases, so do the concerns of whether injuries resulting from these harassments or threats will be covered under Homeowners or Personal Umbrella policies. Typically, parents are not aware of these activities by their children until legal action is taken, which could result in the loss of savings, personal effects, homes, or automobiles.

The injuries that result from cyberbullying may or may not be covered under a personal insurance policy based on state and individual policy forms. Typical injuries that occur are emotional distress, apprehension, fear, or mental injury; all of which may not be classified under “bodily injury” as defined in a Homeowners policy. “Bodily injury” is usually defined as physical bodily harm such as a broken bone; however, some states define “bodily injury” to include emotional distress.

Personal injury liability could provide coverage for allegations of slander, libel, or invasion of privacy; however, it is not automatically included in a Homeowners policy. Purchasing a separate Umbrella policy, or adding an endorsement to a Homeowners policy could add this coverage. Also be aware that there is an exclusion for statements that arise out of oral or written publication under the direction or by an insured with knowledge of its inaccuracy, or knowing that the act would violate the rights of others.

In the event that emotional distress, anxiety or mental injury is not classified as bodily injury, insureds are not likely to have protection against legal costs under their personal insurance policies. In order to reduce the risk in losing assets, time, expense, and aggravation of legal action arising from cyberbullying, parents should use precautions when their children use electronic devices.

Source: Rough Notes; Donald S. Malecki; July 2012

2 votes, 2.50 avg. rating (60% score)
Categories: Loss Control, Personal / Advertising Injury, Risk Management

Pictograph Illustrates Cyber Risk

We came across an excellent pictograph that illustrates the risks involved in not protecting company information. Company reputation, customer satisfaction, and business opportunities are just a few examples of what is at risk due to cyber threats from failing to protect private data. Here is a brief outline of the information included in the pictograph:
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3 votes, 4.00 avg. rating (80% score)
Categories: Breach Of Security, Cyber Liability, Risk Management, Tech Insurance

Reasons Cited For Not Purchasing Cyber Risk Insurance

Percentage of Businesses Citing Specific Reason

43%   Company self insures exposures
18%   Believe cyber risk covered under General Liability
17%   IT department does not think coverage is needed
16%   Coverage too expensive
  6%   Broker advised that risk of claim is low for the company
  5%   Company investigating the purchase of cyber risk insurance
  4%   Doesn’t know coverage exists
  9%   Other reason
11%   Not sure
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2 votes, 4.00 avg. rating (80% score)
Categories: Breach Of Security, Cyber Liability, Risk Management

Cyber Insurance Policies Do Not Cover All Risks

To follow are examples of types of risks that are not covered or partially covered by most Cyber Risk policies:

  • The cost to implement security upgrades after an attack
  • A comprehensive written security program that is typically paired with a regulatory fine or penalty
  • Damage, corruption, or deletion of Intellectual Property
  • Audits performed periodically that are most likely required for several years after a data breach
  • Restoration of a damaged reputation of a business

For example, coverage under a Cyber Risk policy for the damage, corruption or deletion of Intellectual Property is typically limited to the cost of restoration or replacement, not taking into consideration the asset value of the stolen Intellectual Property to the company. In addition, most Cyber Risk Policies also will not provide coverage for upgrading security after an attack has occurred.
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1 vote, 3.00 avg. rating (70% score)
Categories: Breach Of Security, Cyber Liability, Intellectual Property Infringement, Risk Management, Theft

Percentage of Business That Purchase Cyber Liability

Do you purchase stand-alone cyber risk insurance?

                                      25%    Yes
                                      71%    No
                                        4%    Not Sure

The results of this survey are probably skewed due to the number of larger businesses in the survey.  Based on my experience, a much larger percentage of smaller businesses don’t purchase cyber risk insurance.  On a positive note, many General Liability and Business Owner Policies are now offering data breach coverage by endorsement.  This is an inexpensive way to purchase this coverage.  On the other hand stand-alone Cyber Risk policies, which offer much broader coverages than just data breach, typically have minimum premiums that start out in the $2,500 range.

John Sadler

Source:  Business Insurance Survey, Business Insurance, March 19, 2012;

2 votes, 3.50 avg. rating (73% score)
Categories: Breach Of Security, Cyber Liability, Risk Management

Cyber Risk: Limits Most Commonly Purchased

Total coverage limits of stand-alone cyber risk purchased

15%                          Less than $ 5,000,000
48%                          $ 5,000,000 to $10,000,000
19%                          $ 10,000,000 to $25,000,000                                    5%                            $ 25,000,000 to $50,000,000                                     5%                            $ 50,000,000 or more 
7%                            $ Not Sure  

The participants in this survey were obviously larger businesses based on the limits selected.  Smaller businesses with fewer exposures typically selected.  Smaller businesses with fewer exposures typically select a limit of $1,000,000.  However, cyber risk policies include different limits for different coverage parts so it is difficult to determine if the limits have been stacked on top of each other in this survey or if they are showing the limit selected for cyber liability?

Source:  Business Insurance Survey, Business Income, March 19, 2012,

2 votes, 4.00 avg. rating (80% score)
Categories: Breach Of Security, Cyber Liability, Risk Management