Last month I shared some insights on cyber insurance and how to identify potential gaps in your business’s coverage. This time around, I want to share some thoughts on business interruption coverage… more specifically how businesses are impacted by a cyber-related loss.

First and foremost, what is business interruption insurance?

Business interruption insurance (also known as business income insurance) covers the loss of income that a business suffers after experiencing a loss that either interferes with or halts business operations. In addition, BI coverage can also cover business expenses –including payroll – while the business is unable to operate.

As it relates to the cyber world, there are two main exposures that could be covered under business interruption insurance:

1. A ransomware attack that disables a company’s computer system.
When a business is unable to operate, a loss in income can happen immediately. Many businesses rely heavily on online driven revenue. If a system has been hacked and severely damaged, it can take months to restore everything. In addition, the companies’ reputation could be damaged, resulting in fewer customers using their services. This lost income would be covered by a properly written cyber insurance policy.
Example: A large, well-known e-commerce website went down for 30 minutes, and it cost them $66,000 per minute. Approximately $2 million dollars in lost income!

2. Events outside of a businesses control.
This exposure is often overlooked and not included in most stripped down cyber insurance policies. The majority of businesses in today’s world rely on third-party vendors and shared computer systems. These include cloud services, data storage, and other processing functions. Many of these third-party vendors attempt to limit their liability through a variety of contractual terms. This can leave a large exposure if the cloud services you rely on via a third-party vendor go down. In this scenario, dependent [or contingent] business interruption coverage can protect your business from any loss of income that is attributable to that third party’s loss.

The key takeaway… If your business relies on technology, there is a threat of lost income that could be exposed by a cyber attack. Don’t wait, check today if you have coverage on your current cyber insurance policy, or get in touch with me to put the correct coverage in place.

Reach out to me via LinkedIn or use the form below to contact me with any questions about cyber liability coverage or your exposure to risk.

Matt Carnuccio

Consultant | Business Insurance

Matt is a Business Insurance Consultant at RogersGray Insurance. He specializes in Cyber Liability Insurance and works as an adviser to his clients, helping them design a risk management strategy that aligns with their own unique situation. He has 8 years experience working with emerging and middle-market companies that have sophisticated liability insurance needs. Matt also enjoys spending time with his wife and two children, and is passionate about saltwater fishing! You can connect with him on LinkedIn or by email