Court Refuses to Slice Up CiCi's Cyber Extortion Coverage - DataBreaches.Net

"In the rarely litigated space of cyber insurance, the Northern District of Texas issued a win for cyber policyholders this week, offering a clear reminder to insurers that if they want to restrict coverage, they must draft the policy to clearly do so."

"The court held that a Ransomware Event Sublimit Endorsement did not cap CiCi's recovery to $250,000. The court concluded that HSB failed to draft the endorsement with the necessary clarity to limit the coverage as it supposedly intended."

"CiCi suffered a cyber event in May 2022, after a threat actor encrypted its computer systems and threatened to release exfiltrated data unless a ransom was paid. CiCi notified its insurer, HSB, retained the appropriate vendors, and eventually incurred around $1.2 million in costs, including a $400,000 ransom payment."

The Northern District of Texas ruled in CiCi Enterprises v. HSB Specialty Insurance Company that a Ransomware Event Sublimit Endorsement failed to cap coverage at $250,000 due to insufficient clarity in drafting. CiCi suffered a ransomware attack in May 2022 when threat actors encrypted its systems and demanded ransom for data release. The company incurred approximately $1.2 million in recovery costs, including a $400,000 ransom payment. The court determined that HSB did not draft the endorsement with the necessary precision to effectively limit coverage as intended, resulting in a significant win for cyber policyholders and establishing that ambiguous policy language favors coverage.

Read at DataBreaches.Net