As a business owner, navigating the intricacies of insurance policies is a vital aspect of safeguarding your enterprise. Often, entrepreneurs hold a standard commercial lines policy, commonly known as a BOP (Business Owner’s Policy) or, in some cases, a CPP (Commercial Package Policy). Understanding the nuances and exclusions within these policies is paramount, as they can have a significant impact on your coverage. In this blog post, we delve into a critical detail that many business owners might overlookâthe exclusion of cyber risks in standard business owner’s policies.
The Cyber Risk Dilemma: A standard business owner’s policy typically covers physical damages, but what about non-physical threats like cyber risks? In today’s digital age, where businesses face the constant threat of ransomware attacks, hacking, and other cyber threats, it becomes imperative to assess your insurance coverage comprehensively.
The Ohio Case: To illustrate the gravity of this issue, consider a case that unfolded in Ohio. A company fell victim to a ransomware attack, and the perpetrators demanded $35,000 for the release of their computers. The company complied, paid the ransom, and regained access to their systems without any discernible physical damage. However, when the business owner filed a claim with their business owner’s policy, it was promptly rejected by the insurer. The Ohio Supreme Court ruled that the policy explicitly excluded coverage for ransomware attacks due to the absence of physical damage.
The Importance of Cyber Liability Coverage: This case serves as a stark reminder that standard business owner’s policies may not encompass cyber risks. Cyber liability insurance or an endorsement to your existing policy is crucial to fill this gap. Cyber attacks pose a significant threat to businesses, and without specialized coverage, the financial repercussions can be devastating.
Business Interruption Risks: Beyond cyber threats, business interruption risks stemming from ransomware attacks may also be excluded from standard policies. It is imperative for business owners to recognize that not all potential risks are covered under their existing policies.
Consult Your Insurance Professional: While we are not legal experts or insurance agents, we strongly advise business owners to consult with their brokers or agents. Understanding the specifics of your policy and identifying potential coverage gaps is essential for making informed decisions to protect your business.
In a world where cyber threats are on the rise, business owners must be proactive in securing comprehensive insurance coverage. The Ohio case serves as a cautionary tale, emphasizing the need for tailored policies that address the evolving landscape of risks. Take the time to review your existing policies, engage with your insurance professionals, and ensure that your business is adequately protected in the face of cyber threats.