Ransomware attacks have increased in frequency over the past few years. They now rank as the second most frequent type of claim against cyber insurance policies. Experts estimate that a new business is hit with a ransomware attack every fourteen seconds. For 2019, early information is showing that the frequency of ransomware attacks may be decreasing. This seemingly positive trend comes with two significant drawbacks however.
Workers compensation is supposed to protect employers from lawsuits brought by their employees. In exchange for a system of a no fault liability for on the job injuries, employers secure freedom from negligence lawsuits brought by employees that might yield much higher payouts. This protection, however, is not absolute. Like with any rule, there are exceptions.
Cyber incidents and cyber practices are testing the boundaries of the law in numerous unique ways. The length of most litigation and the relative newness of cyber technology means that many of the claims and legal principles governing those claims are still working their way through the court system. The high cost of litigation sends many of those claims to settlement talks without a firm decision to guide future cases.
The Separation of Insureds is a standard policy condition of the commercial general liability policy. Also known as the severability of interests, the condition serves several purposes. Still, it can be quite complicated to understand in some of those contexts. As it is increasingly common for contractors to request or demand a separation of insured provision within a business’s insurance policy, companies should make sure they understand the term and how it might affect them.
In the event of a cybersecurity breach, any company with a cyber insurance policy should contact their carrier as soon as possible. One of the first steps the cyber insurance carrier will take is to hire a forensics company to investigate the breach. Digital forensics is one of the more expensive aspects of most cyber claims, with costs typically ranging from $20,000 to $50,000.
Liability rolls downhill. Big companies use their negotiating leverage to demand favorable indemnification clauses and hold harmless agreements be included in their vendor and customer contracts. Some degree of this is reasonable, but there are always a few players who try to push things as far as possible. The result is indemnification and hold harmless provisions that seem to foist all the liability on companies with less leverage without regard to fault or negligence. Many go so far as to seek that the second party indemnify the first party for the first party’s own negligence.
Action over cases have become increasingly common over the past two decades. These cases involve employees collecting worker’s compensation from their employer, and then suing a third party that caused their injuries through negligence who had a contractual indemnity clause with the employer that covers the lawsuit. The prevalence of these suits have led insurance companies to take action by issuing new endorsements aimed at protecting themselves.
There are recognized patterns of higher risk. For example, Hurricanes and earthquakes do catastrophic damage to a specific geographic area. These natural disasters pose unique risks to insurance companies as a result of that history. If an insurance company insures at lot of this type of risk, it can face massive losses and have its financial stability threatened. For this reason, insurance companies try to avoid insuring too many homes or businesses (for this example) in an at risk area for hurricane or earthquake damage. While this helps keep insurance companies financially sound, it can make coverage harder to obtain for those who need it most.
Lawsuits are expensive... and they only ever get more costly as time goes on. To reduce delays, state governments have searched for ways to fairly apportion damages for certain types of accidents without having injured parties resort to filing lawsuits for some time. Workers' Compensation is one example of a system that states have used to avoid and prevent lawsuits in the specific field of workplace injuries by eliminating any requirement for fault or negligence.