In what is described as the largest cyber loss event in years, on Friday, July 19, 2024, customers of CrowdStrike and many others throughout the world discovered that they could not access critical software and enterprise systems to run their businesses.

The mass outage was due to a defective CrowdStrike software update. The outage notably affected airlines throughout the world, causing the cancellation of thousands of flights, but disrupted many other entities, including government agencies (including transportation and emergency services), banks and financial services companies, hospitals and managed care providers, manufacturers, retail stores, and broadcasting and entertainment companies.

Businesses impacted by the CrowdStrike outage should carefully review their insurance programs to determine whether any policies may cover financial losses caused by the incident or potential claims from affected clients, customers, patients, or others:

• Companies that carry cyberliability insurance should review whether their policies provide contingent business interruption coverage, which may cover lost income and other losses due to an outage or incident at a critical IT vendor. 
• Supply chain insurance may respond to interruptions at other businesses in the company’s supply chain.
• Businesses providing professional services should review the scope of any professional liability and technology errors & omissions coverage to determine how those policies may respond in the event of a claim, and whether the company should put its carriers on notice of circumstances (or a potential claim).

Companies also should carefully review any service or vendor agreements to determine whether they have rights under policies issued to the service provider or vendor, and whether they have any other rights of recovery independent of insurance.

Reed Smith’s Insurance Recovery Group is one of its premier practice groups. With insurance recovery lawyers across the globe, we are uniquely positioned to serve our clients in all aspects related to losses arising from system and network outages and failures, cyber events, and other tech-related business interruptions. Our expertise in this space allows us to provide our clients with the most up-to-date knowledge and experience in identifying and accessing your insurance recovery options.