“The more technologically sophisticated our vehicles become, especially with increasingly automated functions, the more prone they become to outside interference,” Goldberg Segalla partner Jonathan L. Schwartz writes in Bus and Motorcoach News. “From onboard diagnostics to Bluetooth modules to embedded Internet modems to Wi-Fi Internet routers to USB device ports to high-definition radio to near-field communication devices, modern vehicles have myriad vulnerabilities to hackers” — and commercial vehicle operators and rental agencies are particularly at risk.
Businesses and professionals seeking cyberterrorism liability coverage have limited, and problematic, options, Jonathan explains. Insurance is available through the federal Terrorism Risk Insurance Act (TRIA) and its successor, the Terrorism Risk Insurance Program Reauthorization Act, but to qualify for coverage unbder these policies, the Secretary of the Treasury, the Department of Homeland Security, and the U.S. Attorney General must certify an incident as an act of terrorism. “Perhaps surprisingly and unfortunately for those having availed themselves of this TRIA coverage, the Treasury has never certified an attack as an act of terrorism,” Jonathan notes. “That includes the Boston Marathon bombings, even though President Obama used the term ‘terrorism’ in a speech.”
There is alo a private marketplace for standalone terrorism coverage, but this focuses on property rather than liability coverage. “No matter the terrorism coverage, if the hacked or hijacked vehicle is used to deliver a nuclear, biological, chemical or radiological weapon, the loss will not be covered, as such losses are generally uninsurable.”
Commercial vehicle operators and rental agencies might find coverage under a cyberinsurance policy, Jonathan notes. “But, unlike commercial auto coverage, the wordings of cyberinsurance policies can vary greatly. There is no ‘off-the-rack’ cyberinsurance policy.”
“Ultimately, before considering this coverage, policyholders should consult with an insurance broker and coverage counsel who are knowledgeable of cyberinsurance policies.”
Jonathan is chair of Goldberg Segalla’s Cyber Risk Coverage subgroup.