Business interruption coverage is an essential insurance needed by all businesses. The costs of restoring a business’s operations can easily exceed the actual cost of repairing the damage. The length of time a business is not in operation can put you out of business. If the firm’s building has a fire, it can take months to repair the building. Between the time that the loss occurred until the restoration of the firm’s operations at the original location, a firm still needs to operate and will incur extra expenses and reduced revenue. With physical damage losses firms look to their business owner’s policy (BOP) for this essential insurance coverage to address loss firm revenue (the expenses of relocating the business, and the additional expenses to operate when your primary facilities are damaged). This includes having to restore your computer system being out of action because of a physical covered loss.
But the BOP does not cover a business interruption due to a cyber-attack, data breach, or ransomware attack. The following is a typical definition under a BOP’s policy regarding your computer systems in the business interruption coverage section:
h. Electronic Data Processing
(1) When a Limit of Insurance is shown in the Declarations for Business Personal Property at the described premises, you may extend that insurance to apply to direct physical loss of or damage to “Electronic Data Processing Equipment” and to “Electronic Data Processing Data and Media”, caused by or resulting from a Covered Cause of Loss.
The definition only provides coverage for a physical covered loss. There is no coverage for a cyber-attack.
Your malpractice/errors & omissions insurance provides no business interruption coverage. Even if the insurer might pay certain losses that deal with a malpractice claim caused by a cyber-attack, the firm will be on its own for business interruption costs caused by cyber-attack.
Case in point a law firm hit by a ransomware attack had loss billings of over $700,000. The firm found out the hard way that they needed a properly endorsed cyber policy.
Purchasing a properly endorsed cyber policy covers business interruption expenses for cyber related losses. Cyber insurance business interruption coverage is an essential insurance for law firms, accounting firms, and title agencies.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080