Business Interruption Coverage Times Three

ADJUSTINGTODAY.COM

There is yet another complicating factor for claims that can arise from simultaneous property, equipment breakdown and cyber losses: Separate provisions in property and equipment breakdown forms addressing computer- and data-related losses.

ISO CP 00 30 includes a general exclusion for losses arising from a suspension of operations due to loss or corruption of electronic data. The form then gives back some data coverage through an additional coverage with a separate $2,500 sublimit for “Interruption of Computer Operations” caused by viruses and coding designed to damage a computer system. Inclusion of the word“designed”suggests that the coverage responds only to malicious attempts to disrupt a system; it does not pay for losses arising fromdefects in the insured’s own coding.

The HSB equipment breakdown form does not address computer- and data-related income losses as such, but provides coverage for restoring data lost due to an equipment accident under a separate data restoration sublimit.

Claimants seeking maximum recovery may look for ways to invoke these coverages — even for insureds that have separate cyber income coverage. That’s because income limits in cyber policies generally eat into an overall aggregate limit.

Generally speaking, the more a cyber policy pays toward an income loss, the less it has available to pay for other cyber losses.

Other Forms

Complications also arise under policy forms that include their own provisions for cyber-related income coverage. While ISO provides such forms, for our purposes we’ll consider forms from two other advisory organizations serving the property/casualty insurance industry:

AAIS dates itself from 1931 and MSO was founded in 1944. Both chose to remain independent of ISO when the latter was created in 1971 through the merger of other rating bureaus.

MSO’s Businessowners policy includes a built-in coverage extension for “loss of income from interruption of computer operations.”

The coverage pays up to a declared limit for lost income and related expenses due to a necessary interruption of operations following an interruption of computer operations caused by hacking, a virus or a specified cause of loss.

Generally speaking, the more a cyber policy pays toward an income loss, the less it has available to pay for other cyber losses.


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