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Understanding Your Cyber Liability Insurance Claims

New technologies breed new kinds of corporate risks. It used to be a headline; now it's a common story. Sophisticated global companies have been subject to massive data security and privacy failures. Hackers have attacked companies as varied as Target, Sony and even Google.

Cyber security breaches can result in significant business interruption, reputational harm and brand damage. As cyber risks are better understood, the insurance industry has responded by creating specialized business policies to address these risks.

The Worst-Case Scenario

Hackers penetrate your system and steal the sensitive, personal data of thousands of customers or patients. Identifying the scope and nature of the breach and notifying affected customers can be very expensive. Then the class actions come.

Traditional business policies - commercial, several liability, property, errors and omissions - may or may not provide coverage in response to a cyber security breach depending on the particular policy language. Legal opinions across the country are in conflict on many questions. The insurance industry has responded with specialized policies written to address this specific loss and cyber insurance policies can vary greatly.

What makes cyber liability insurance unique is that it generally contains both first party and third party coverage. First party coverage can include the cost of forensic analysis and crisis management, loss of business income and the cost of restoring IT systems to a pre-data breach state. Third party coverage can include protection from claims related to theft of private information such as Social Security numbers, bank and credit card account numbers and medical records.

Although distinct from technology errors and omissions coverage, many cyber policies contain similar language. However, cyber threats and policies are continually evolving as new cyber threats are discovered and reported. At Pillsbury & Coleman, LLP, our attorneys are experienced in representing California clients whose insurance carriers fail to fulfill the terms of their policy. We can also proactively help you evaluate your policy and help you identify coverage gaps.

Stay Ahead of the Game

To meet the needs of today's fast-paced, high-tech world, our lawyers have made new law and expanded the rights of policyholders. To learn if we can be of assistance when your business is facing a crisis, please call our San Francisco office at 415-655-1549 or send us an email today.