SPECIALTY LINES · 5 MIN READ

Cyber Liability, Crime, and Social Engineering

The third-party side of cyber splits into two principal grants. Network security liability covers claims from failures of the insured's network security - transmitting malware, enabling denial-of-service attacks, or unauthorized access that harms others. Media liability (multimedia or online content liability) covers content torts: defamation, libel, slander, false light, copyright and trademark infringement, plagiarism, and misappropriation of name or likeness in the insured's electronic and printed content. A defamation claim over an online article is a media claim, not a network security claim. Regulatory defense and fines coverage responds to government proceedings - a state attorney general or FTC investigation after a breach - paying defense costs and civil penalties where insurable by law; many jurisdictions permit insuring civil penalties but not criminal fines. PCI DSS assessment coverage addresses contractual fines and assessments from the card brands after payment-card breaches. The most litigated boundary in cyber crime is computer fraud versus social engineering fraud. Computer fraud insuring agreements require loss resulting directly from an intruder's unauthorized manipulation of the insured's computer system. Social engineering fraud (fraudulently induced transfer) responds when an authorized employee, deceived by a spoofed email or impersonation call, voluntarily initiates the transfer. Business email compromise - the spoofed-CEO wire - is the paradigm social engineering loss, and after years of coverage litigation modern forms expressly carve BEC out of computer fraud and route it to a social engineering agreement with a much lower sublimit, commonly in the $100,000 to $500,000 range. When both a commercial crime policy and a cyber policy carry funds-transfer-fraud coverage, the conventional allocation runs the cyber sublimit first with the crime policy excess, though the final order depends on each policy's other-insurance wording. Large programs stack limits in towers: a primary policy plus excess layers, each attaching at the exhaustion of all underlying limits. Excess layers are typically following form - incorporating the primary's terms except where expressly modified - and attach vertically: the first excess pays only after the primary is exhausted by payment of covered loss, then erodes its own limit before the next layer attaches. Aggregation clauses (common-cause endorsements) determine whether related events share one limit or several.