Cyber insurance rejects claim after BitPay lost $1.8 million in phishing attack

If you bought cyber insurance so you’d be covered if you were hacked, and then had $1.8 million stolen after being hacked, wouldn’t you expect your insurance claim to be paid? If so, then think again as the claim can be denied due to the wording of the risk insurance contract.

BitPay, a Bitcoin payment processor, had purchased cyber insurance from Massachusetts Bay Insurance Company (MBIC), but BitPay was in for a rude awakening.

In December 2014, an unknown hacker pulled off a social engineering attack; he spearphished BitPay’s Chief Financial Officer, managed to capture corporate credentials, then used the hacked email account to spoof emails to the CEO; the hacker tricked BitPay into making three separate transfer transactions over two days to the tune of 5,000 bitcoins, which were valued at $1,850,000. Well at least the company had cyber insurance, right? No; the insurance company denied the claim due to the wording in the contract; BitPay then sued the insurance company.

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