Iran fires raise questions of cyber insurance for physical damage
A recent series of industrial fires in Iran, which have been blamed on hackers, has opened up the question of insuring against physical damage as a result of cyber breaches, according to Alex J Lathrop, a partner at law firm Pillsbury Winthrop Shaw Pittman. Rather than relying on cyber insurance, which covers only data breaches, traditional commercial general liability, property and business interruption policies, where exclusions are not clearly indicated, should provide coverage for physical damage sustained during a cyber attack, he said.

A recent event that received surprisingly little media attention serves as a reminder of a lurking cyber risk that is different in kind and scale than more widely and frequently reported privacy-related data breaches.

Between July 29 and September 14, 2016, a series of fires and explosions occurred at petrochemical plants and pipelines in Iran. Although Iranian government officials initially denied that the fires were caused by a cyber attack, they later acknowledged that Iran’s petrochemical industry has been the target of cyber attacks, and the head of a cyber security firm specializing in protecting industrial systems stated that he was “100 percent” sure that the fires were the result of hacking.