How does ransomware coverage work for law firms?

Ransomware has become one of the most significant cyber threats facing law firms. Attackers encrypt the firm's files, client data, and systems, demanding payment in cryptocurrency for the decryption key. Cyber insurance policies address ransomware through several coverage components that work together to respond to the full scope of the incident.

The cyber extortion or ransomware coverage component pays the ransom itself if the firm and carrier determine that payment is the most effective response. Most policies require the carrier's consent before paying a ransom, and the carrier will engage professional negotiators who specialize in reducing ransom demands. The carrier also verifies that the payment does not violate any sanctions regulations, as payments to certain entities or countries are prohibited by law.

Beyond the ransom payment, the policy's incident response coverage pays for forensic investigators to determine how the attack occurred, what data was compromised, and whether data was exfiltrated before encryption. Business interruption coverage reimburses the firm for lost revenue and extra expenses incurred during the period when systems are inoperable. System restoration coverage pays for the cost of rebuilding or restoring affected systems and data from backups.

Carriers have tightened underwriting requirements for ransomware coverage in response to the surge in attacks. Most carriers now require multi-factor authentication on all remote access points, endpoint detection and response tools, regular offline backups, email filtering and phishing awareness training, and a documented incident response plan. Firms that cannot demonstrate these controls may face higher premiums, reduced limits, or ransomware coverage exclusions. Implementing strong security controls both reduces your premium and substantially reduces the likelihood of a successful attack.