Cyber-Physical Risks: Are You Covered?

Cyber-Physical Risks: Are You Covered?

December 14, 2016, Covington Alert

Recent reports from both government and private groups have highlighted the risk that cyber hacking may now cause serious physical injury or damage. This new risk stems from connected industrial controls or electronic devices comprising the Internet of Things (IoT)—the network of over 50 billion objects ranging from children’s toys to home appliances to medical devices to critical infrastructure components. With such physical risk comes potential liability for those who make or use these networked products.

But does insurance cover this novel liability risk? This alert discusses potential coverage issues for claims alleging physical harm from cybersecurity failures. It also offers practical tips to address these emerging risks and the insurance issues surrounding them.