General Liability Policies Won’t Protect You from Cyber Risks
Many businesses still assume that their general liability (GL) policy will shield them from the physical consequences of a cyber event – a misconception that could leave them woefully unprepared.
For years, the GL policy was seen as a safety net for the physical aftermath of a cyber breach, like property damage or physical harm from a ransomware attack on an industrial control system. But since 2014, the digital risk landscape has shifted dramatically. Cyber threats have become increasingly sophisticated, and the lines between physical and cyber risks have blurred.
Ransomware-For-Hire Attacks Pose a New Threat
This shift is underscored by the rise of ransomware-for-hire attacks, where malicious actors use pre-packaged malware to demand payments from vulnerable targets. These attacks can cause physical damage, such as in the case of a 2020 attack on the Colonial Pipeline, which led to a pipeline shutdown and subsequent fuel shortages.
What This Means for Businesses
The traditional GL policy won’t cover these types of cyber risks, leaving businesses exposed to significant financial losses. Cyber insurance, on the other hand, can provide the necessary protection, but it often requires a separate policy that’s tailored to the unique risks of your business.
The key takeaway is that businesses need to reassess their risk management strategies and consider purchasing cyber insurance to complement their existing GL policy. This will help them mitigate the financial fallout of a cyber event and avoid being caught off guard in a rapidly changing digital-risk landscape.
It’s time for businesses to recognize that their GL policy is not a substitute for dedicated cyber insurance. By understanding the evolving nature of digital risks and taking proactive steps to protect themselves, they can minimize the impact of a cyber attack and stay ahead of the threat curve.
