European Union: GDPR's Potential Fines And Other Exposures Raise Cyber Insurance Coverage Questions

Last Updated: November 13 2018
Article by Matthew L. Jacobs (Matt), Richard DeNatale, Mauricio F. Paez, Undine von Diemar, Jörg Hladjk and Irene Robledo
Most Read Contributor in United States, September 2019

In Short

The Situation: The European Union's General Data Protection Regulation ("GDPR") has raised questions regarding the scope of coverage and protection afforded by current cyber policies, especially with respect to potential GDPR fines.

The Recommendation: Along with other actions, policyholders should amend their policies to ensure they have coverage for processing violations, confirm their policies expressly cover regulatory fines, and evaluate whether their policies carry sufficient limits to respond to the potentially enormous fines under the GDPR.

Looking Ahead: Companies subject to the GDPR should continually evaluate their policies to ensure they have adequate coverage under the new regulations.

The European Union's GDPR has created significant legal risks for companies conducting business in Europe, and it has also generated increased demand for cyber insurance. Questions exist, however, regarding the scope of protection provided by cyber policies, and companies may find it necessary to modify policies to obtain adequate coverage.

The GDPR includes many new requirements to strengthen protections for personal data. Companies could face significant penalties for noncompliance, which can reach €20 million or four percent of annual revenue, whichever is higher. For companies that suffer a data breach, the GDPR creates mandatory notification obligations and the risk of individual damage claims. Taken together, these factors have dramatically changed the risk exposures for companies that collect or process data within the European Union.

To date, we have not seen the emergence of EU-specific cyber policy forms. Instead, insurers have tried to address GDPR risk by adding language or endorsements to existing policies. One insurer is offering a GDPR endorsement that covers defense costs, damages, and penalties resulting from:

any Claim first made against any Insured during the Policy Period for a violation of the EU General Data Protection Regulation (or legislation in the relevant EU jurisdiction implementing this Regulation).  

Another insurer is offering pre-breach network monitoring services by a third-party vendor as a way of mitigating GDPR risk.

Lurking beneath these efforts is a fundamental uncertainty as to whether cyber policies will cover GDPR fines. Under the laws of some, but not all, EU Member States, regulatory fines are uninsurable as a matter of public policy. The issue is whether such a rule should apply to a GDPR fine imposed for mere negligence in safeguarding personal data. This is a pressing question for policyholders—one that regulators and brokers have been unable to answer.

A spokeswoman for the Information Commissioner's Office, Britain's data protection regulator, has said, "there is nothing in the GDPR which either permits or prohibits insurance coverage against fines." Also, one major insurance broker has warned that policyholders should "assume nothing" regarding the insurability of GDPR fines. In the absence of better guidance, it will be up to policyholders and their coverage counsel to develop strategies for enhancing coverage for GDPR risks.

Recommended Actions

When reviewing existing policies, corporate policyholders should consider the following:

Cyber insurance typically covers first- and third-party losses arising from the disclosure of personal information in a data breach or cyber incident. The GDPR, however, regulates the processing of personal data. Processing violations could result from the length of time an individual's data has been stored or the failure to erase personal data upon request (the "right to be forgotten"). Some current cyber policies would not cover such processing claims because they do not involve the unauthorized disclosure of data.

Policyholders should amend their policies as necessary to ensure they have coverage for processing violations.

The question of whether GDPR fines are insurable may not be resolved any time soon. Yet insurers continue to sell cyber policies that promise to cover GDPR fines. Policyholders should take advantage of this market reality to: (i) obtain the best available coverage for GDPR risks; and (ii) include provisions that reduce the likelihood that coverage will be voided on public policy grounds. Companies should ensure their policies expressly cover regulatory fines, particularly where the fine is not the result of intentional misconduct. Regulatory coverage should include a specific reference to the GDPR.

Policyholders should also ensure that other policy terms do not operate to limit coverage for civil fines. In addition, it may be useful to include a choice of law provision based on "most favorable jurisdiction," similar to those used for punitive damages coverage. Policyholders should undertake an analysis, with the assistance of counsel, to determine which jurisdictions might give rise to a GDPR proceeding and whether policy language can be added to select a governing law favorable to coverage.

Policyholders should assess whether their cyber policies afford sufficient limits to respond to the potentially enormous fines under the GDPR. This will involve consideration of the nature and scope of the company's business operations, the strength of its cybersecurity, and the specific exposures it faces under the GDPR. Corporate policyholders must also pay close attention to deductibles, self-insured retentions, and sub-limits, which are often used to limit regulatory coverage.

The GDPR is already in place and applies to companies operating in the European Union as well as companies outside the European Union that offer goods or services to EU residents.

Any company subject to the GDPR should evaluate the issues described here when placing or renewing cyber insurance programs, to ensure their policies address the risk exposures created by the new regulatory regime.

Three Key Takeaways

  1. Cyber insurance typically covers losses arising from the disclosure of personal information in a data breach or cyber incident. The GDPR, however, regulates the processing of personal data.
  2. As a matter of public policy, regulatory fines are uninsurable in some EU Member States.
  3. Companies subject to the GDPR should make certain their policies address the risk exposures created by the new regulatory regime.

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

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

Similar Articles
Relevancy Powered by MondaqAI
Scott & Scott LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Scott & Scott 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 (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

To Use 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