Bricking Coverage in Cyber Insurance

Bricking is a cyberattack that renders a device unusable, turning it into a “brick.” It targets hardware, disabling computers, tablets, hard drives, phones, and other technological instruments. Unlike typical cyber incidents involving data theft or software disruption, bricking corrupts essential software or firmware, leaving a device permanently inoperable. This happens even if you can’t see physical damage. While you can often restore lost data and patch software issues, bricking can lead to irreversible hardware failure and extended downtime.

As destructive bricking attacks become more common, businesses should mitigate their risks. They can do this by ensuring their cyber insurance policies cover these events. This article provides more information on bricking coverage. It discusses what it is and what it typically includes. It also discusses the common limitations and coverage gaps of base cyber and property insurance policies. We also provide an overview of best practices for insurance buyers.

What Is Bricking Coverage?

Bricking coverage is a specialized enhancement in a cyber insurance policy. It covers the costs of replacing or restoring devices a cyberattack has rendered inoperable. These expenses can be significant depending on the incident’s scale.

Standard cyber and property insurance policies may exclude coverage for cyber-caused hardware failures, especially when there’s no traditional physical damage. Bricking endorsements fill this gap. As cyber threats evolve, it’s increasingly crucial for organizations to review their cyber and property insurance policies. They need to determine whether bricking coverage is included or must be added separately. Not all insurers automatically include bricking coverage, so you must purchase it as an add-on in many cases. Having this protection can be critical to minimizing operational disruption and financial loss following a bricking cyberattack.

What Does Bricking Coverage Typically Include?

Bricking coverage generally includes the cost of replacing hardware rendered inoperable by a cyberattack. This can involve a wide range of devices, including laptops, point-of-sale terminals, servers, and Internet of Things (IoT) equipment. These devices are essential to business operations. Coverage usually applies only when you cannot repair or restore devices. Insureds must demonstrate permanent inoperability. When devices are “bricked,” they often cannot be repaired or restored through software fixes, so full replacement is necessary.

In addition to the hardware itself, bricking coverage may also provide expenses related to the replacement process. This can include installation costs, labor for swapping out devices, and proper disposal of the damaged equipment. While specifics vary, bricking coverage can significantly reduce an organization’s financial and operational burden following a bricking attack.

Common Policy Limitations and Coverage Gaps

Cyber and property insurance policies often contain limitations and coverage gaps. These can significantly impact recovery following a bricking incident. Since they may exclude this type of loss from base policies, you may need an endorsement to receive coverage.

Even when bricking is covered, exclusions may apply. For example, they may limit coverage to certain types of attacks. Additionally, sub-limits, waiting periods, and other exclusions within the policy can result in out-of-pocket expenses. This reduces its overall effectiveness. Some policies only cover mass bricking events (e.g., affecting multiple devices), while others apply coverage on a per-device basis, which can affect claim outcomes.

Best Practices for Insurance Buyers

To secure protection against bricking-related losses, insurance buyers should follow these best practices when evaluating and negotiating coverage:

• Review cyber and property insurance in tandem. Thoroughly evaluate these policies together to identify and address potential coverage gaps. Pay particular attention to how each policy addresses bricking while verifying whether it’s covered, the coverage limits, and what specific events or triggers activate that coverage.
• Identify high-risk devices that could require bricking protection. Conduct an inventory of critical hardware assets, especially those essential to operations or difficult to replace. Some devices may warrant additional bricking coverage due to their importance, vulnerability, and replacement cost. These include servers, industrial control systems, and specialized medical or manufacturing equipment.
• Engage with brokers to clarify exclusions and claim triggers. Work closely with a licensed insurance broker to fully understand the coverage. Clarify what types of incidents are excluded, what conditions must be met to trigger a claim, and what the notification and documentation requirements are.

Conclusion

Bricking coverage is an important but often overlooked aspect of insurance. It requires careful attention to policy language and exclusions. By proactively assessing coverage needs and working closely with insurance professionals, businesses can better protect critical assets and avoid costly gaps in protection.