One of the more positive outcomes as a result of increasing cyber attacks is how companies can now obtain cyber insurance. This type of insurance protects the company against financial losses due to a wide range of cyber attacks. Or that is how it should work, at least, as a law firm in Rhode Island is suing its insurer over not paying money lost due to a ransomware attack.
Cyber Insurance Is Still In Its Infancy
It is never a pleasant experience to deal with a ransomware attack. A law firm in Rhode Island found that out the hard way, as it cost them close to US$700,000. That is quite a steep amount, yet it also goes to show how expensive dealing with such a malware attack can be. It is not just about not being able to provide services, but also billing issues and other expenses that need to be covered to get rid of the ransomware altogether.
Luckily, the law firm had signed an agreement with a company providing cyber insurance. As a result of this insurance, the law firm should be able to recoup these financial losses with relative ease. Unfortunately for them, things are not playing out as originally expected, as the insurer has no plans to pay them US$700,000 despite the firm suffering from a documented ransomware attack.
It is worth noting the law firm eventually was forced to pay the criminals a US$25,000 ransom due to this attack. It took them a total of three months to get everything sorted, as setting up a Bitcoin account and renegotiating the deal took up a lot valuable time. Moreover, the first decryption tool did not work properly, which caused even more [unnecessary] delays. All things considered, it is not hard to see how the firm racked up about US$700,000 in losses.
All of the firm’s 10 attorneys could not go about their regular business due to the ransomware attack. Even though Sentinel Insurance provides them with an insurance against these attacks, they only paid US$20,000 so far. That amount is, according to the company, the maximum policy limit for losses sustained from computer viruses. The loss of business income is, apparently, not covered by this insurance policy whatsoever.
Rest assured the Rhode Island law firm is not too pleased by the stance taken by Sentinel Insurance. However, the company’s policy requirements clearly state any lost business income will only be covered if it stems forth from physical loss or property damage. Neither of these things occurred for the law firm, which, in theory, does not entitle them to any additional money. However, they have now taken Sentinel Insurance to court over this matter.
All of this goes to show there are still a lot of gray areas when it comes to cyber insurance. Then again, it is also up to individual clients to read up on what the policy covers and what not, before taking things to court. It appears the Rhode Island law firm has no chance of winning their case, although one never knows how judges will look upon evidence provided related to a technology-oriented investigation. This court case could set an interesting precedent for future cases related to cyber insurance.
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