Business interruption insurance coverage is an essential coverage needed by all businesses. It is common that the costs of restoring a business’s operations can easily exceed the actual cost of repairing the damage that caused the business interruption. 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 firm’s operations are restored 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 will not cover a business interruption coverage 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.
This definition only provides coverage for a physical covered loss. There is no coverage for a Ransomware Attack.
Do not look to your malpractice/errors & omissions insurance to provide business interruption coverage either. 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 was hit by a ransomware attack. Firm stated that they had loss billings of over $700,000. The firm found out the hard way that they needed a properly endorsed cyber policy.
Purchasing a cyber policy that also covers business interruption expenses for cyber needs is an essential insurance coverage for every law firm, accounting firm, and title agency.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080