Compliance » Employee Negligence Doesn’t Negate Cyber Coverage

Employee Negligence Doesn’t Negate Cyber Coverage

You are requested not to speak to the man at the wheel.   Vintage engraving showing a captain asleep at the wheel of the ship during a storm. Engraving from 1854, photo by D Walker.

June 13, 2016

A decision from the Eighth Circuit Court of Appeals upheld a district court summary judgment for the policy holder in a case where the carrier tried to withhold coverage for cyber theft on the grounds the employee had been negligent. In fact, a bank employee had inadvertently left a computer running overnight with a routine cybersecurity measure disabled. The hackers got away with $485,000. Nonetheless, the court said, the “efficient and proximate cause” of the loss was not the employee negligence, and the carrier was on the hook.

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