What to Watch Out for in a Cyber Insurance Policy

This coverage is also often misunderstood and lumped under the term “Cyber Crime” – this is incorrect. Cyber Crime is a very broad term that can include sections that are almost always automatically covered, such as Cyber Extortion. Social Engineering has recently been defined more adequately as Funds Transfer Fraud, which is the fraudulent transfer or theft of funds caused by instructions made by a person purporting to be an authorized employee, outsourced provider or customer of yours. This also covers off the definition of “phishing”, which would be included in this section.

• Electromagnetic Discharge
  The existence, emission or discharge of any electromagnetic field, radiation or magnetism that allegedly or actually affects the health, safety or condition of any person or environment, or that affects the value, marketability, condition or use of any property.

• Power Failure or Core Internet Infrastructure Failure
  Excludes claims caused by power outage, or any other failure to a system, infrastructure, or network where you have no direct control.

• Product IP & Patent Infringement
  Excludes acts that cause the infringement or misuse (among other things) to any patent or patent right.

• Unsolicited Communications and Data Collection
  This excludes claims for unsolicited emails, phone calls, or other correspondence which breaches the applicable legislation. This can sometimes be written back into the policy through the Privacy and Cyber Security coverage section if it occurred due to a network compromise.

** The above are general examples only; each insurance policy is different and standard exclusions may apply. Please read your PDS and contact your insurance advisor to review your specific policy. **

• Contractual Liability
  Unless this has been specifically added to the policy, coverage is excluded for any obligation you have entered into under a written contract. However, this exclusion does not usually apply to liability you would have in the absence of a contract.

• Insured versus Insured Claims
  There are many variations to this exclusion, but the main purpose is to not cover a dispute between insureds and/or the company.

• Prior & Pending Exclusion
  States that the policy will not cover any pending or prior litigation involving the Company that has begun before the Prior & Pending date of the policy.

• Sanctions Exclusion
  Excludes claims where cover, payment, service, benefit and/or any business or activity would violate any applicable trade or economic sanctions, law or regulation.

• Bodily Injury/Property Damage
  The policy will not respond to a Bodily Injury & Property Damage claim as this exposure is typically covered by a Public Liability policy. This exclusion usually has a write back (gives coverage back) for Defence Costs, Employment Related Wrongful Acts and Security Claims.

• Retroactive Date Exclusion
  This excludes any wrongful act committed or alleged to have been committed prior to the inception of the policy. This is a way for insurers to exclude past acts and make the policy only forward looking.

** The above are general examples only; each insurance policy is different and standard exclusions may apply. Please read your PDS and contact your insurance advisor to review your specific policy. **