Adding insult to injury, businesses victimized by a cyber-incident—data breaches, cyber-attacks, ransomware, etc.—due to no fault of their own, may also have little or no recourse to recoup their losses. More often, after a cyber-incident, businesses are left not only with their first-party losses, but may also face third-party claims from customers and contractual counter-parties. As such, businesses should carefully analyze whether they have potential products liability claims that may be asserted where software (and hardware affected malware) defects played a role in the cyber-attack. Such claims should be pleaded carefully to maximize the company’s ability to access a putative defendant’s products liability insurance coverage.

Cyber-attacks are in the news every day, yet too many businesses lack adequate coverage. A broker whose company services a number of Fortune 100 companies recently relayed that one of his clients had no cyber insurance coverage, and had little clue, if any, on what type of cyber coverage would best meet the company’s needs. As shocking as that might sound to anyone whose practice involves insurance, the fact is that a great number of companies are only now trying to catch up with the digital age’s darker side: malware, ransomware. phishing attacks. and hacks.

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