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Integrated approach helps plug cover gaps


Risk managers should coordinate their cyber liability and property insurance purchases, experts recommend.

“What may have been an academic risk five, six years ago with the internet of things is now a very real and tangible risk today,” said Joshua Gold, a shareholder with Anderson Kill P.C. in New York. Because of this, “It’s important to make sure that you understand how a policy interreacts with the various risks that can come about.” Look at the property, liability and crime programs and identify inconsistent or contradictory terms and exclusions in the different lines of coverage, Mr. Gold said.

Darin McMullen, Philadelphia-based errors and omissions/cyber insurance product leader at Aon Risk Solutions, said, “We’re taking a look across our client programs to make sure there is seamless coverage and no gaps.” Aon works to avoid potential overlaps, or clarify which policy will respond first, he said, so that coverage can be coordinated.

“It’s important to understand that a property policy and a cyber policy need to be integrated,” just as a casualty or products liability policies needs to be integrated with cyber, each of which have different coverage parts with regard to first-party costs, said Joe DePaul, cyber/E&O practice leader for Willis Towers Watson P.L.C.

“When you look at how to optimize the coverage for our clients, we really have to take a hard look at the language of a property policy, for example how that does — or does not — dovetail with the language of a cyber policy,” he said.

There may be gaps, because while property coverage is expanding, “it is not the be-all and end-all when it comes to potentially replacing a cyber policy and, frankly, I don’t think it’s ever going to be intended to do so,” Mr. DePaul said.

Smaller to midsize risks who are relying on a property policy in particular may need a terrorism or stand-alone cyber policy to obtain the desired coverage for physical damage losses arising from a cyber attack, said David Derigiotis, vice president and director of professional liability at Farmington Hills, Michigan-based Burns & Wilcox Ltd.

“It’s not that you’ll be less likely to get the coverage. It’s just that you’ll need to look in a different place” for it, he said.

With larger risks, “you can do a lot more manuscripting and you can bring greater creativity in putting one policy together,” he said.