Business interruption insurance coverage is an essential coverage needed by all businesses. It is not uncommon 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 building that your firm resides in has a fire it can take months to repair the building. Between the time that the loss occurred until operations are fully restored to the original location a firm still needs to operate and likely will incur extra expenses and reduced revenue. For physical damage covered 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 answer for business interruption coverage if your firm suffers a business interruption due to a cyber-attack, data breach, or ransomware. 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. A Ransomware Attack is not covered.
Don’t 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 cyber, the firm will be on its own for business interruption costs caused by cyber.
Case in point is the law firm of Moses Afonso Ryan Ltd that was hit with ransomware that we blogged about last year. Firm states 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 to be an essential insurance coverage for every law firm, accounting firm, and title agency.