Locked Down by Simek John Nelson Sharon D

Author:Simek, John, Nelson, Sharon D. [SHARON D. NELSON, DAVID G. RIES & JOHN W. SIMEK]
Language: eng
Format: epub
Publisher: American Bar Association
Published: 2012-04-01T04:00:00+00:00

Coverage

Would-be purchasers of cyberinsurance are advised to read carefully and ask questions. There is no consistency between the coverage of the various insurance companies, and they all use different language. It is very hard to determine exactly what you’re purchasing.

This makes it tough on the poor lawyer who finds that someone has invaded the law firm network and is now holding data hostage until a ransom is paid. You’d better make sure your policy covers that because it has happened—probably much more often than anyone knows.

What if data is somehow transported to a social media site? Are you covered there? And how about data breaches in the clouds? It is widely reported that cloud providers tend to have less coverage than might be prudent from the point of view of the law firm that engaged the cloud. And just read their terms of service; we can guarantee that the provider will try to insulate itself from liability.

Not surprisingly, with all the confusion, battles over coverage have wound up in court. In Zurich v. American Insurance Co. v. Sony Corp. of America, Zurich is seeking to absolve itself of any responsibility to defend or indemnify Sony for claims asserted in class actions and other actions stemming from the 2011 hacking of Sony’s PlayStation Network. Zurich maintains that the general liability policies it sold to Sony do not apply. Heck, if Sony’s lawyers didn’t know what their insurance covered, imagine the fog a solo or small firm attorney might be in.

Make sure you understand how an insurance company would expect you to prove a data breach. What documentation would you need? When would you receive the proceeds?

Ask these questions of your current insurance representative:

Does the current policy cover computer forensics or other investigative services in the event of a data breach?

What about notifications to those affected and credit reports?

Does it cover data and other nonphysical perils under the Property policies? Almost always, no.

If an insider causes the breach, does this fall under the “intentional acts” exclusion? Probably, yes.

Is coverage unavailable for acts outside the provision of professional services?

If you are liable for the destruction of electronic data, are you covered under the General Liability or Property policies? You’re likely to hear, “No, you’re not.”

Are direct losses caused by a vendor covered under crime policies?

Crime policies usually cover theft of money, securities and other tangible property. Does yours cover the theft or destruction of electronic data?

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