Target’s Cyber and D&O Insurance Might Save Them Serious Cash

We can’t resist talking about this Target Data breach incident.  It has become a major talking point in tech community and the news that keeps surfacing makes for a great little case study.  So in the latest bit of news to surface:

Target does in fact have Cyber and D&O insurance…to the tune of $100M and $65M respectively.  That’s quite a hefty amount of coverage and may come in handy even more than originally expected.  In the time since we last wrote about the incident, the estimated amount of stolen accounts has grown from 40 million  to 70 million accounts!

With D&O and Cyber coverage in place, it seems like whoever spearheaded the insurance purchasing project at Target did it right (unlike Sony, for example).  We’ve already discussed the merits of having cyber coverage in this situation, but the D&O is also useful.  D&O generally protects Directors and Officers for alleged wrongful acts committed while acting as their capacity as a Director or Officer.

One of the biggest reasons for D&O insurance to kick in is for an alleged violation of the Director’s fiduciary duties to the shareholders. One of those is the duty of care, which includes the duty to remain informed about the goings-on of the corporation.  You might argue that it’s the Directors’ duty to remain informed about the any possible security vulnerabilities, and not doing so is a violation of the duty of care.  This claim may be a little farfetched, but not farfetched enough to leave out of a plaintiff’s complaint filing.

The truth is any lawyer worth his salt will throw any reasonable claim on the complaint if it has a remote chance of getting his client more money.  That’s exactly what these insurance policies are designed to protect against: any lawsuits that even remotely hit the mark.

We swear this will be the last post about Target for a long time…partially because it’ll be an eternity until we hear how much Target’s insurers pay out.  Claims adjustments like this can take months, but when the news breaks, it’ll be interesting to see how much Target’s insurance policies eased their pain.  I’m willing to bet it’ll be more than a marginal help…

Worried about your own Cyber or D&O liability? We understand! Feel free to reach out to us any time to alleviate those worries. We’ll teach you everything you need to know and help you find a policy that will protect you when you need it. We can be found at (646)-854-1058 and info@foundershield.com.