Q&A Cyber liability insurance
********
All monitored alarm systems depend upon communication networks that are beyond the control of the monitoring company. Examples of these communication networks include POTS lines, air waves, satellite, and cellular towers. Direct wire connection from alarm panel to central station is a distant memory.
All types of alarms and monitored communication share a common characteristic, all are designed and intended to detect and or reduce loss; all are in the nature of security, either for person or property or both. Another common feature of the services are that alarm companies price their services competitively having no correlation to the risks involved in the services. Intrusion and fire have obvious risks. It seems I get a call at least weekly from companies intending to enter the PERS market on a nationwide basis. More recently I am getting calls for GPS services.
Although VOIP communication may be more compatible with alarm systems than several years ago contracts still contain a recommendation that POTS be used instead of VOIP. The Disclaimer Notice I offer warns against the use of VOIP. My Standard PERS contract specifically provides that PERS will not work with VOIP, and a few weeks ago an alarm company told me they did offer PERS monitoring using VOIP.
From a contract perspective, while technology has changed, the contract terminology addressing communication has needed little revision. The contract makes clear that signals pass through communication networks that are independent of the monitoring company and over which the monitoring company has no control. The familiar disclaimer of liability - contracting away liability even for negligence or breach of contract - follows. It's important to remember that no matter what service you are providing and whichever communication net work you are relying upon the contract terminology needs to carefully describe the service, the limitation of the service and take advantage of your right to contract away liability - not only for conditions and contingencies beyond your control, but for your own negligence and breach of contract.
***********
Q&A Cyber liability insurance
Question:
****
Ken
As you are well aware, traditional alarm companies are providing much more that traditional alarm systems these days. In our case we are now providing and installing computer networks for various small business and local government offices. We use your computer consulting contract where it is appropriate for services provided, but it does not appear to cover installation of computer networks where we provide and install all hardware, software, and data backup equipment. I guess I have two questions. Do you have contracts for this activity?
Also, it appears that some alarm liability insurance policies exclude coverage for computer networks. Do you or any of your newsletter readers know of insurance companies that will cover the overall spectrum of what the industry now considers a system integrator? For business customers that term now includes computer networks.
Thank You
Jim Hamilton
Greystone Systems, Inc.
**********
Answer:
*****
I don't have a computer installation contract but the Computer Consulting Contract can easily be modified to cover equipment design and installation.
As far as "cyber" liability, insurance broker/agent Mike Kelly has been recommending that for a while now and offers a policy which includes that coverage. Here is one of MIke's responses that addresses the issue:
*****
Thanks for all the cyber coverage info. on your CFC Underwriting Cyber Product’s. I through you my be interested in looking at a page of my Cyber Presentation that reviews the 2003 case law separating ANALOG or “GL Tangible Property” from IP or Cyber “Electronic Data “ in regards BOTH Liability and Property . Following this case (ISO) Insurance Service Office developed the 2004 General Liability Policy that confirmed “Tangible Property is NOT Electronic Data “ in regards to General Liability.
Iam often asked ( as I am sure you are) to explain the difference between Analog Vs. IP Insurance , the above information is big aid in explaining why Cyber ‘Electronic Data “ Coverage’s are needed for exposures of IP / Internet ----- Liability, Crime, Property & Media that effects the use of E-Mail, Web Site & Communications Monitoring.
I will look forward in coverage review--- of the ongoing Cyber Risk. Exposures, which a far beyond Personal Data Theft.
Best Regards & Cheers;