Product Update

Cyber Insurance Discussion Added to Construction Risk Management

Cyber risk is sometimes thought of strictly in terms of liability for an electronic data breach—primarily sensitive personal information and consumer credit card data—leading some to believe that cyber insurance is only needed by those who store customer personal or financial information in their systems.

In truth, these widely-publicized cyber risks are only the tip of the iceberg. Contractors do not store employee or customer credit card information, so they will not have the same exposure to data breach that retail firms have with respect to responding to a breach. However, they do have exposure to loss from theft of paper or electronic files, loss or theft of mobile electronic devices, theft of customer lists or human resources records (including employee personally identifiable information that could lead to identify theft), and the presence or installation of smart devices into building systems. For example, theft of confidential bid or cost information, drawings and specifications, employee data, etc. is a significant threat to contractors. The use of smart technology in building systems is another significant exposure. (The hackers in the well-documented Target breach gained access to the Target network by planting malware on the system of a Target refrigeration contractor.)

Commercial general liability (CGL) and commercial property policies do not adequately address these risks. Cyber insurance is needed to adequately cover these exposures. This Construction Risk Management release outlines the 13 available insuring agreements in cyber and privacy policies and explains how they might apply in a construction setting.

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