Cyber Crime and Cyber Terrorism

BUSINESS INTERRUPTION INSURANCE
The world today is very different than it was in 1877 but what Lloyds did was to 
set the mold for modern-day Business Interruption Insurance (BI Insurance) which 
many businesses today still rely upon. Dependent upon the cover, BI Insurance pro-
vides cover for a company’s loss of earnings or profits in the unlikely event that they 

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CHAPTER 16
The rise of cyber liability insurance
should be closed for a period of time for any number of reasons, including (but not 
limited to); fire, flood, earthquake, or acts of terrorism.
Typically there are three types of BI Insurance cover available:
• 
“Business interruption”
insurance compensates the insured for income lost 
during the period of restoration or the time necessary to repair or restore the 
physical damage to the covered property;
• 
“Extended business interruption”
(EBI) offers cover which is typically 
limited by a period of time, for the 
income
lost after the property is repaired but 
before the income returns to its pre-loss level; and
• 
“Contingent business interruption”
(CBI) offers cover for the insured’s loss 
of income resulting from physical damage, not to its own property but to the 
property of third-parties (i.e., the damage did not affect the insured’s property—
but affected someone they rely upon and therefore affects their profit).
BI Insurance in whichever form is recognized as a very valuable and necessary type 
of insurance and one which many businesses see as the basic level of insurance they 
need in order to trade. But whilst BI Insurance and its variants cover for loss of 
profit, reimbursement of costs and compensate for damages to physical assets such 
as property, they rarely if ever cover the cost of non-physical assets. This means that 
BI Insurance may reimburse a claimant for the loss of the computer but it is unlikely 
to compensate them for the data which sits upon it, even though the data which this 
device holds may be worth many times the value of the device itself.
This gap some may feel is bridged by an additional form of insurance known as 
Professional Indemnity Insurance (PI Insurance) which can help protect a business 
if claims are brought against it by a client who believes some form of negligence or 
error has occurred (intentional or unintentional). In professional services organiza-
tions, such as financial services or legal entities this form of insurance is crucially 
important as the risk of litigation is often extremely high. This form of insurance 
may also cover the cost of penalties or fines arising from a data breach and brings 
us closer to a new form of insurance which has begun to grow in prominence and is 
quickly becoming the next “must have” for businesses operating in the modern era; 
Cyber Insurance Liability.