United States: No More Tears: Insurance Coverage For The "WannaCry" Ransomware Attack

Last Updated: June 2 2017
Article by Tyrone R. Childress, Richard DeNatale and Jason B. Lissy
Most Read Contributor in United States, September 2019

In Short

The Situation: At least 300,000 computers in more than 150 countries were affected by the WannaCry "ransomware" attack.

The Result: Beyond the ransom demand, other expenses, inconveniences, and complications for victimized companies are likely.

Looking Ahead: Commercial policyholders should review their insurance coverage provisions before another ransomware attack occurs.

This month's WannaCry "ransomware" attack—the first truly global incident of its kind—is believed to have affected at least 300,000 computers in over 150 countries, claiming among its victims many large corporations and public entities. A form of malicious software ("malware"), the WannaCry ransomware leverages exploits reportedly stolen from the NSA by the Shadow Brokers hacker collective. WannaCry (or "Wanna Decryptor") holds computers hostage by encrypting files until a ransom, demanded in the virtual currency Bitcoin, is paid for a decryption key to unlock them.

With business interruption losses estimated in the billions of dollars, the WannaCry attack has delivered a sobering reminder of the serious threat posed by cyber extortionists. The fact that such events are expected to continue with increasing frequency and sophistication only underscores the need for commercial policyholders to carefully review their insurance programs before the next ransomware event. Even companies with cyber insurance may encounter coverage challenges from their insurers with respect to ransomware attacks. This Commentary identifies key insurance issues for commercial policyholders to consider as they do so.

Review the Fine Print of Your Cyber Insurance Coverage Now

The potential losses caused by ransomware attacks can extend well-beyond the ransom itself to include forensic investigation and crisis management expenses, data repair and restoration costs, revenue loss due to the interruption of normal business activities, as well as third party liabilities. While other policies in your insurance program may respond with coverage for certain of these losses and should also be reviewed, particular attention should be paid to the scope of any cyber insurance coverage.

Cyber insurance policies typically contain insuring agreements addressing third-party liabilities (e.g., network security, privacy, and media liabilities) and incident response costs (e.g., forensic investigation, defense and crisis management costs, including customer notification and credit monitoring expenses). Some cyber coverages also provide insurance for first-party losses, including business interruption, the cost to restore lost or compromised data, as well as cyber extortion expenses.

Given that there are nearly 70 cyber insurers and no standard forms (so policies vary greatly in scope), policyholders should be aware that some cyber insurers may not include ransomware coverage in their basic form, but will include it upon request via endorsement. Therefore, it is important for risk managers to pay particular attention to the fine print of their company's cyber insurance coverage. As illustrated by the WannaCry attack, the billions of dollars in estimated business disruption losses dwarfed the approximately $300 per computer Bitcoin ransoms, the most significant economic losses to companies targeted by ransomware are often for related business disruption and forensic investigation costs. Risk managers should confirm that their company's cyber insurance policies adequately address these exposures.

In addition, commercial policyholders will want to ensure that their cyber insurance policies are drafted broadly enough to capture both known and future forms of cyber extortion. For example, while cyber extortionists now commonly demand payment in the form of Bitcoin and other virtual currencies (or "crypto-currencies"), a number of cyber insurance policy forms have not been revised to specifically allow the payment of cyber extortion ransoms in such currencies. Where possible, policyholders should insist that their cyber insurance policies be drafted to expressly cover such modes of payment.

Policyholders should also review their cyber extortion coverage for any advance insurer consent provisions, which can apply not only to the payment of ransom demands, but also to forensic investigation and crisis management expenses necessary to investigate, evaluate, and address cyber extortion threats—thereby presenting an additional logistical hurdle for policyholders to face during such crises. While it is important for policyholders to be aware of such provisions, policyholders may be able to negotiate the deletion or modification of these and other provisions with their cyber insurers for no additional cost or only a modest increase in premium.

Policyholders should also be mindful of policy exclusions concerning their information technology operations. Some cyber insurance policies contain so-called "failure to patch" exclusions, which purport to exclude coverage for losses attributable to a failure to install or implement available software patches for known software vulnerabilities. Insurers may attempt to deny coverage for cyber-attacks where the policyholder used outdated software and did not implement security patches on a timely basis.

Cyber insurance policies also commonly exclude coverage for bodily injury—a consideration of particular importance to healthcare providers, whose ability to deliver adequate patient care may be compromised during cyber extortion events. While the costs incurred by healthcare providers to investigate and end a ransomware attack may be covered, insurers may attempt to deny coverage for bodily injury allegedly resulting from the ransomware's impairment of healthcare providers' ability to provide medical services. In that event, affected healthcare providers may need to look to other policies within their insurance programs that insure bodily injury, such as professional and commercial general liability policies, which themselves may exclude coverage for cyber-related events. As this example illustrates, commercial policyholders will be well served to identify and address these potential coverage gaps in advance of the next cyber extortion incident.

Do Not Overlook Traditional Insurance Coverages

As noted above, businesses should keep in mind that other policies within their insurance program may also respond with coverage for ransomware losses. Specifically, kidnap and ransom policies that include extortion as an insured event may respond with coverage for related ransom monies and forensic investigation and crisis management expenses.

Similarly, although certain commercial property insurance policies now contain exclusions for computer-related losses, those that do not may also afford coverage for ransomware-related business interruptions. In the event of ransomware-related business interruption, some commercial property insurers may nevertheless dispute whether the "physical loss" requirement of such policies has been met. Policyholders should keep in mind, however, that courts in certain jurisdictions have determined that the loss of use or functionality of computer networks, including as a result of cyber attacks, may constitute "physical loss" sufficient to trigger business interruption coverage. The determination of whether "physical loss" has occurred will, therefore, continue to require a close examination of the particular facts of each case.

Policyholders that have experienced losses due to a ransomware event should accordingly obtain and carefully review all policies that may potentially respond with coverage, including those in which your business is identified as an "additional insured."

Remember to Provide Timely Notice of Ransomware Events

For many businesses affected by the WannaCry ransomware, what began with a $300 ransom demand—a figure by itself insufficient to exhaust many policies' self-insured retentions—ultimately resulted in business interruption losses and other costs in the millions of dollars. And there may be more problems yet to come. Ransomware attacks are often used as smokescreens to conceal broader hacking activities and theft of data. Over the next several weeks, victims of the WannaCry attack may discover that they have suffered a broader network intrusion that will result in additional costs. Policyholders should accordingly err on the side of caution by promptly giving notice of a ransomware event under all potentially applicable insurance policies as soon as possible.

Although the particular notice requirements vary by policy and applicable state law, a policyholder's failure to promptly meet these deadlines may unnecessarily complicate its insurance recovery, or, worse, insurance companies will argue that such a failure to meet these deadlines in a timely fashion results in a forfeiture of coverage. In addition to timing, policyholders should also follow any instructions set forth in the insurance policy concerning the manner of notice (e.g., whether the notice must be in writing, to whom notice must be given, and what information must initially be provided).


As the first global incident of its kind, the WannaCry ransomware attack marked the beginning of a new chapter of cyber crime. While the foregoing has identified some of the insurance considerations implicated by ransomware events, businesses interested in proactively managing their ransomware exposure should carefully evaluate the sufficiency of the coverage provided under their existing insurance programs before the next ransomware attack.

Four Key Takeaways

  1. Cyber insurance policies vary significantly in scope.
  2. The most significant losses to companies targeted by ransomware are often related to business disruptions and forensic investigation costs.
  3. Ransomware attacks are often used to conceal broader hacking activities and theft of data. 
  4. In the event of a ransomware attack, policyholders should give notice of the event to their insurers under all potentially applicable policies as soon as possible. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Smith Gambrell & Russell LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Smith Gambrell & Russell LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions