Last month the United States Court of Appeals for the Sixth Circuit issued its anticipated decision in Indian Harbor Insurance v. Zucker, affirming a 2016 decision from a federal district court in Michigan that an Insured v. Insured (“IVI”) exclusion bars coverage for a claim brought by a post-bankruptcy litigation trustee for the benefit of the insured debtors’ creditors. The district court’s Indian Harbor decision was driven largely by the mistaken conclusion that a post-bankruptcy trustee is an ordinary assignee of the debtor company—an insured—and therefore purportedly stands in the shoes of the insured debtor for purposes of the IVI exclusion. As we described at the time, that decision, however, ignores the fundamentally different nature of transfers pursuant to Bankruptcy Code Section 1123 when compared to ordinary assignments pursuant to state contract law and the fact that a post-bankruptcy trustee assumes special powers as an estate representative. Unfortunately, after appeal, this issue still remains unresolved.
At the beginning of 2017, many publications predicted that ransomware would be one of the most significant cyber threats of the year. The year is not even half over and that prediction appears to be coming true.
On Friday, May 12, 2017, tens of thousands of organizations and companies across the world fell victim to a virulent form of ransomware known as “WannaCry.” The global event has been recognized as one of the largest cyberattacks ever. Continue reading “Ransomware and Cyberinsurance”
This blog post is Part Two of our blog series and highlights several strategies for maximizing the value of a cyber insurance purchase. Part One of the blog series, highlighted the need for an organization to reevaluate its insurance coverage as part of a comprehensive strategy for addressing emerging cyber risks and outlined several ‘‘big picture’’ considerations relevant to any organization contemplating a cyber insurance purchase. This second part focuses on several strategies to consider when negotiating a cyber insurance purchase and seeking to customize a policy to align with an organization’s particular business needs. Continue reading “Managing Cyber Risks: Tips for Purchasing Insurance That Works for Your Business (Part 2)”
Many corporate executives generously serve as directors and officers of nonprofit organizations. While they are undoubtedly inundated with meetings and workshops focusing on corporate risk management at their day job, they may not consider potential liability arising from their philanthropic work. Just as a corporate director may face lawsuits, even those lacking merit, for allegedly breaching fiduciary obligations to shareholders, so, too, a nonprofit director may face similar allegations of wrongdoing for a broad range of activities including, for example, allegedly permitting the mismanagement of funds or approving an employee’s termination. Even if the director ultimately prevails after a trial on the merits, the nonprofit may not possess the financial means to indemnify her or his legal fees. Before any such issue threatens financial well-being, it is prudent for any individual joining a nonprofit organization to take the time to make sure the nonprofit has appropriate insurance coverage. So what is appropriate coverage?
More insurers are offering stand-alone cyberinsurance policies than ever before. At the same time, there are very few decisions by courts regarding this relatively new breed of insurance policy. Most of the decisions construing insurance coverage for cyber risks to date involve other types of insurance policies, such as commercial general liability (“CGL”) and commercial crime policies. Although such cases may not involve cyber policies per se, buyers trying to navigate the cyberinsurance market ignore them at their peril. They illustrate the types of cyber incidents that have generated insurance coverage disputes significant enough to be litigated to decision. Familiarity with such cases can help buyers select and negotiate cyber risk policies with wording aimed at minimizing such disputes and increasing the scope and certainty of the coverage available to the policyholder.
Today’s political climate is rife with reminders about the importance of data privacy and cybersecurity. According to the World Economic Forum’s 2017 Global Risks Report, the greatest technological risks facing the world include large-scale cyberattacks and massive incidents of data fraud and data theft. And it’s no secret that companies can lose millions of dollars, and the loyalty of their customers, when their data is stolen. It is thus increasingly important for companies, large and small, to obtain adequate insurance coverage to protect against these risks. But are all cyberattacks covered under your policy, and what happens if a cyberattack is considered an act of war? The answers depend, and they could make the difference in your company’s survival. Continue reading “The Art of (Cyber) War”
With information technology impacting nearly every aspect of commerce in our “wired” economy, few issues present more concern to businesses today than cybersecurity. Cyberattacks continue to proliferate at an alarming rate and the threats facing companies continue to evolve and become more sophisticated with each passing day. The legal and financial costs associated with such events also grow more serious, as legislators, regulators, and customers insist on greater protection and impose more stringent requirements. Meanwhile, insurance companies have sought to limit the coverage available under traditional insurance policies with new exclusions aimed at cyber-related risks. As a result, it has become imperative for organizations to reevaluate their cybersecurity protocols and breach response plans—and their insurance coverage assets to help offset losses and liabilities associated with such events when all other safeguards fail. Increasingly, this means that companies must consider purchasing cyber-specific coverage to insure against these emerging risks and address the potential gaps in their traditional insurance programs. Continue reading “Managing Cyber Risks: Tips for Purchasing Insurance That Works for Your Business (Part 1)”