Will Companies’ Insurance Coverage Withstand the Onslaught of COVID-19 Claims?: Cybersecurity Trends

This may come as no surprise to you, but since March, litigation has engulfed many organizations in disputes stemming from the novel coronavirus pandemic. Class action securities litigation, bodily injury lawsuits, and insurance coverage litigation have already made their way to courts nationwide.  Will companies’ insurance coverage be able to withstand the expected litigation onslaught of COVID-19?

According to Legaltech® News (Deploying D&O and Cyber Insurance Coverage Against COVID-19 Claims, written by Joshua Gold), pandemic-fueled litigation will test the reliability of the insurance coverage many organizations have purchased. A rise in litigation will necessarily translate into a rise in insurance claims under policyholders’ third-party liability insurance.

Industries reliant upon people gathering in the same location will suffer the brunt of the business displacement. The cruise industry, casinos, sports leagues, theaters, restaurants, and travel businesses generally, will feel a disproportionate amount of pain, at least for the near term.

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With an effective vaccine almost certainly several months away, at least, and with no evidence of a sharp decline in new infections on the horizon in the United States, crashing stock prices in certain business segments will lead inevitably to shareholder suits. Investors will want their money back, so to speak. Directors and Officers (D&O) insurance coverage will be key to protecting senior management against liability. Claims will be asserted that companies did not properly disclose certain risks to operations from viral outbreaks or that they failed to properly manage the risk. Whether those suits have any viability may be beside the point, given how expensive class action investor suits are to defend. Given this reality, a number of coverage fights are likely to ensue under D&O insurance policies.

On the cyber liability front, the coronavirus pandemic promises to pose two main perils: (1) intrusion by a hacker into computer systems, with opportunity heightened by a massive shift to telecommuting and a worried (and, sometimes desperate) populace clicking on links that promise official-looking relief payments or medical “alerts”; and (2) a major breakdown in privacy norms, where entire populations will be tracked, monitored and biometrically encoded as part of an unprecedented public health response.

As I’ve already discussed previously, telecommuting on a massive scale leaves many organizations vulnerable to additional cyber perils. Indeed, even before most local and federal governments were sounding the alarm over COVID-19, cyber scammers were using the fear, confusion and national angst over coronavirus as a way to hack systems and steal. Phony “official”-looking governmental communications have been a mechanism used by cyber criminals to infiltrate systems and commit crimes. Nonetheless, cyber insurance coverage should be available for cyber perils that trade off of coronavirus fear and distraction, whether it occurs during telecommuting or when using computer systems in the office.

The article goes on to discuss several court cases where, in the past, insurance companies have tried to deny coverage under D&O insurance policies where exclusions for claims of bodily injury or property damage are included – without success.  By and large, the author contends that D&O coverage should be available for securities claims that were precipitated by the financial whirlwinds generated by the pandemic.  Whether that will be the case for pandemic claims remains to be seen.


So, what do you think?  Do you think that we will see more cybersecurity breached and more insurance claims as a result of the pandemic?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.


  1. I suspect we will see a large increase in legal activity. Certainly insurance disputes will increase as the activity increases.

  2. Yes, especially a rise in litigation brought on by employees or customers alleging that their places of work failed to adequately protect them or warn them of threats.

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