CNA Denies Cyber Insurance Claim

Key takeaway:   The insurance applications and underwriting questionnaires prepared in connection with cyber insurance do matter.

Cyber security, and cyber insurance, have dominated the industry headlines for several years now, but even as companies, brokers and insurers work to develop these products, there has been a dearth of case law interpreting key provisions.  This is beginning to change as disputes arise and make through way through the judicial system.

One such suit came last week when CNA filed a declaratory judgment action against its insured Cottage Health System, seeking reimbursement of both defense costs and a $4.125 million settlement it had paid out on a claim made under Cottage's cyber policy.  In January 2014, Cottage was sued in a class action in California state court, where it was alleged that the records of more than 30,000 of Cottage's patients had been disclosed to the public via the internet.  Cottage allegedly stored such records on an