Internet-connected devices have become increasingly prevalent, and there is no sign that this trend is slowing. However, this soaring level of internet connectivity poses a risk of physical damage to property or bodily injury as a result of a breach—a risk far less likely to be covered under a cybersecurity insurance policy than traditional breach-response and litigation costs.
In the article “Adding Insult to Injury: Is There Coverage for a Data Breach or Hacking Event that Causes Physical Damage?” published in Bloomberg BNA, senior associate Ken Kronstadt discusses the physical risks associated with security vulnerabilities, how cybersecurity insurance policies may exclude physical damage resulting from a breach, and whether CGL or property policies provide coverage for physical damage resulting from a breach event.
“Coverage for physical damage resulting from a cybersecurity event can be elusive,” Ken wrote. “Unless [a policyholder’s policy] unequivocally provide[s] coverage for property damage resulting from a data breach or hacking event, policyholders should always review all relevant policies thoroughly and be aware of any gaps in coverage.”