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The Rise of Cyber Insurance Liability Litigation

By Chet Kronenberg and Tyler Bernstein
February 29, 2016

As businesses are quickly learning, companies today have no choice but to confront the risks presented by the proliferation of cyber-based attacks targeting their confidential business information. Faced with this growing threat, many companies have begun taking steps to fortify security measures protecting their informational and technological infrastructure in the hope of preventing a cyber-attack. In addition, many companies have purchased cyber insurance liability policies that may provide indemnification and defense coverage following a cyber-based incident. This article examines four recent insurance coverage lawsuits stemming from a cyber-based incident.

Cyber-Attacks

In this technological era, headlines lamenting massive data breaches are commonplace. For example, in 2013, Target Corporation suffered a well-publicized data breach that exposed private information concerning 40 million debit and credit card accounts. Then, in 2014, hackers supposedly affiliated with North Korea breached Sony Corporation's servers and leaked a wide range of highly sensitive business information. That same year, Home Depot was victim to a data breach that exposed the payment cards and e-mail addresses of nearly 56 million of its customers. In 2015, health insurer Anthem Inc. was attacked by cyber hackers who obtained data such as names, birthdates, Social Security numbers, medical IDs, addresses and income on tens of millions of current and former Anthem customers and employees. The foregoing examples are only a handful of the now-seemingly ubiquitous occurrence of corporate data breaches that leave individuals' private and sensitive information exposed and vulnerable to misuse or exploitation.

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