Standalone Cyber Coverage Enters Mainstream Market

 

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NEW YORK, July 20 – According to a report appearing in insurancejournal.com, AIG has rolled out a standalone cyber policy that provides primary insurance protection for property damage, bodily injury, business interruption, product liability and a number of other cyber risks.  It is a broad spectrum product specifically aimed

The insurance giant is marketing CyberEdge Plus as offering primary protection for

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What is envisioned here is to combine cyber insurance and risk mitigation offerings, with traditional coverage concepts informing its cyber approach. AIG said that the blend gives customers “knowledge, data and experience developed over decades of underwriting, evaluating and mitigating property, casualty and financial line risks.” AIG also touts the product as the first primary coverage written in a standalone policy designed to address cyber exposures such as property damage, bodily injury and business interruption.

Property/casualty insurers consider cyber to be a fast-evolving risk. They have worked hard to adapt, however, with companies including OneBeacon, Liberty Mutual and The Hanover launching new cyber policies targeting specific areas.

Kevin Kalinich, global practice leader, cyber insurance for Aon Risk Solutions, said that the insurance industry “has done a reasonable job of addressing personally identifiable information related to cyber exposures, such as those faced by retail, financial institutions, healthcare and hospitality.”

And it makes sense, he said, to target cyber coverage on basic areas such as bodily injury, property damage and business interruption.

“As nearly every organization in every industry embraces technology, cyber exposures arise in new areas that can result in bodily injury, tangible property damage and business interruption,” Kalinich said.

He added that AIG previously tried to address these new exposures “via a drop down difference in conditions structure, which sits above existing property, general liability, crime, professional liability, etc…”

With this in mind, Kalinich said that AIG’s new CyberEdge Plus product is a change, because it helps make clear “that the policy is primary coverage with respect to cyber perils, including broader coverage in terms of tangible damages.”

Kalinich added that Aon has worked with carriers including AIG to develop “a number of innovative cyber insurance and services solutions across multiple lines of business, industries, geographies and size of business.”

Basement Collapse Caused By Defective Workmanship Not Covered By Property Policy

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VIRGINIA, July 26 – Peerless Insurance has won a summary judgment motion in federal court in Virginia, after the Court held that a property policy insuring a building under renovation did not provide coverage for a collapsed basement wall which was the result of a subcontractor failing to properly shore a basement wall.

Construction Company Taja Investments was doing excavation work in a building crawl space. One of the basement walls collapsed because a subcontractor did not properly shore the walls as construction proceeded.  Taja filed a claim with Peerless.

Peerless denied the claim made by the insured, Taja, arising out of the collapse and Taja filed suit.  In granting summary judgment, the Court reasoned that the collapse was a result of the insured’s failing to safeguard the basement walls during excavation.  The Court found under Virginia law that there was no independent cause of the loss apart from the insured’s failure, and the failure of the subcontractor. The Court also rejected the lines of cases outside Virginia which do not require independent cause to establish coverage.

The Court also found that an earth movement exclusion applied to bar coverage whether or not the movement was underground and whether the movement was natural or man made:

“while the movement that caused the east wall’s collapse occurred below grade (in the basement, below the ground level of the structure), it still involved movement of the earth surface (the uppermost layer of the soil and clay).”

Taja Investments v. Peerless Ins. Co. a/k/a Liberty Mutual Insurance Co., Civ. No. 1:15-cv-01647, 2016 U.S. Dist. LEXIS 95760 (E. D. VA, July 21, 2016).

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