CYBER PROPERTY DAMAGE
Cyber risk no longer stops at data
When cyber-attacks cause physical damage, traditional property cover often falls short
Exposure to cyber-related risks continues to grow across all industries, with the potential to cause devastating financial impacts. A breach can lead to the interruption of business operations, affected balance sheets, damaged reputations and in some cases result in physical damage to property and goods.
With advancements in technology, the importance of protecting your physical assets and goods has never been more important. Most property polices now contain cyber exclusions, restricting cover for physical damage and associated business interruption losses caused by a cyber event.
The property exclusions you need to know:
- LMA5401 / LMA5402 – Excludes both cyber incidents and cyber acts.
- LMA5400 – Covers fire and explosion from a non-malicious cyber incident, but excludes losses from a malicious cyber act, and excludes related business interruption and machinery breakdown cover.
Not all insurers apply Lloyd's clauses - bespoke wordings will usually replicate the LMA5400 exclusion at a minimum.
Property damage case studies
Oil & Gas
A cyberattack breaches the control systems of a remote oil drilling site via a third-party contractor, targeting the rig’s automated pressure management system. The attacker overrides safety thresholds, causing a high-pressure release that damages the blowout preventer and surrounding infrastructure. The incident results in extensive equipment damage, environmental cleanup costs, and operational downtime.
Manufacturing
A cyberattack infiltrates the control network of an automated assembly line. Attackers manipulate robotic arm movements, causing collisions and damage to expensive precision equipment and halting production for days, leading to loss of revenue and stock.
Food & Beverage
A threat actor infiltrates the network of a supermarket chain and encrypts the whole network, leaving the firm unable to access systems including warehouse management, logistics, and point-of-sale. The firm is unable to sell any of the available products, causing the goods to spoil.