Policyholders can increase the chances of a smooth claims process long before a cyber incident occurs by carefully filling out their cyber liability insurance applications, consulting with technology experts and making sure they understand their policies and terms, experts say.
Asking questions with insurers about the meaning of clauses, in what is a relatively new and evolving line of insurance, and clarifying the scope of coverage can help avoid claims disputes.
Tara Bodden, general counsel, director of claims, at insurtech managing general agency At-Bay Inc. in San Francisco, said policyholders should carefully consider what they report in their cyber insurance filings.
If a company incorrectly answers questions about issues like safety hygiene and there̵
7;s an incident, “there’s a possibility you’re not going to be covered for that,” she said.“The big headline there is, when you’re actually filling out your application for cyber insurance, make sure you’re asking people who know about security,” Bodden said.
She said one issue that has come up in litigation concerns differences between companies’ privacy policies and security practices. “If you have a privacy policy, make sure your security practices match it,” she said.
Disputes over claims typically involve a difference between insurers’ and policyholders’ understanding of what policies provide, said Bhavesh Vadhani, Tysons, Va.-based cybersecurity, technology risk and privacy practice global leader for CohnReznick LLP, an accounting, tax and advisory firm.
“Do your research” and get an understanding from the insurance broker what the policy provides, Mr. Vadhani. Read the fine print and ask the insurer, “What does this clause mean and what do you actually cover?” he said.
James Berry, London-based head of claims for Corvus Insurance Holdings Inc., said: “To me, it’s more about policyholders being aware that we’re operating on the basis of the policyholder who is assumed to have read and understood” the policy’s terms and conditions and exclusions.
If there is a lack of clarity during the issuance process, “it goes back to a two-way street,” he said. “Underwriters ask questions to understand the risk and the answers given are very important,” and during a cyber event, those questions can be highlighted, he said.
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