Travis runs a logistics company that keeps wheels turning. His Ft Worth team moves equipment, supplies, and materials across the state every day. They have carved out a great niche distributing these items to some of the biggest manufacturers around.
Travis obviously knows downtime costs money. One day off can cost his business six figures. He knows how to move trucks, but technology is proverbial black box to him. So he had a cyber policy put in place to protect his systems and customer data.
A few months ago he installed system upgrades, and his entire shipping system went offline. He was devastated. A forensic investigation showed a cyber attack traced back to an overseas group as the cause that shut everything down. Drivers sat. Deliveries backed up. Clients got nervous.
When Travis filed a claim against his cyber insurance, his insurance company denied it. The cyber attack, they said, could be tied to a politically motivated group. That triggered something in the policy called a war and terrorism exclusion.
He was stuck and pissed off.
Sadly, this kind of thing happens more than you’d think. And most Texas business owners don’t have this in their risk assessment lists.
Let’s break down what’s really going on with terrorism exclusions in cyber insurance. But more importantly, what you can do about it before you’re the one getting the surprise.
Here’s what most people don’t read when they sign the paperwork for cyber coverage.
Many cyber insurance policies have language buried inside them that excludes losses caused by acts of terrorism. That means if your systems suffer a cyber attack and it is a state-sponsored attack or the group of criminals behind it is seen as a political or ideological threat, your claim likely will not be paid.
It doesn’t have to be a big, headline-grabbing terrorist organization, either. It just has to be tied to the right kind of motive. Financial loss caused by politically driven or state-sponsored attacks can be pushed into this gray area where your cyber coverage disappears due to the war and terrorism exclusion.
That’s what happened to Travis. And that’s what could happen to you if your policy isn’t structured the right way.
One of the biggest problems with this kind of cyber insurance policy exclusion is that nobody agrees on what terrorism actually means in the cyber insurance world.
Some insurance providers lean on definitions from the federal government through the Terrorism Risk Insurance Act. Others leave it completely up to the internal lawyer's interpretation. There’s no industry-wide standard, which means insurance companies can shift the goalposts when it suits them.
That creates room for denials, delays, and finger-pointing when you need help the most after a cyber attack. If they can make the case that the attack was terrorism, you could be left high and dry. Even if it looks like a standard malware attack on the surface.
This is the good news. Some carriers will let you include cyber terrorism coverage on your cyber coverage through an endorsement. In other cases, it may be built into a more comprehensive policies that are now being sold on the cyber market with brokers.
But here’s the catch. It’s not standard, and most insurance brokers won't think to add it for you unless you ask. Many business owners don’t even know to bring it up because they are not thinking about data breaches, phishing attacks, or other social engineering attacks. Travis had security measures in place, but he was focused on keeping the supply chain moving rather than fine print on his policy.
That’s why these gaps show up when it's too late to do anything about them.
Travis had done what most responsible business owners do. He checked the box. Got the cyber policy. Trusted the agent. Moved on.
But he didn’t know what was actually in the cyber coverage he bought. He didn’t know about the terrorism and war exclusion. And he had no idea his systems weren’t really protected from the kind of cyber attack that would actually shut him down.
This is why working with someone who understands these insurance policies matters. The words in the policy exclusions, the endorsements that need to be added, and the definitions that shift from carrier to carrier are not obvious to most of us. It’s certainly not your job to become an expert.
It’s ours.
We’ve seen how these contractual liability exclusions are worded. We know where the traps are. And we know how to build cyber threat protection that’s made for Texas businesses facing the risks out there today.
We call it True Texas Cyber Insurance. It’s not about bells and whistles. It’s about making sure your policy actually works when something breaks so that you keep the business running and avoid the reputational damage that comes with cyber attacks.
When you reach out to our agents, we start with our cyber risk check-up. That check-up walks through your existing coverage and shows you exactly what’s missing and what you can do to reduce your risk. It’s fast. It’s simple. And it gives you peace of mind before the problem ever hits.
Click the button below to get True Texas Cyber Insurance.