blueprints, pervasive reliance on email, and remote access systems are now stan- dard in the industry, but they come with inherent risks. Each platform, whether that of the owner, contractor, or other construction participants, is a potential entry point for cybercriminals. Beyond financial theft, ransomware


attacks pose a significant threat to busi- ness operations. Such attacks can bring construction projects to a standstill by freezing access to schedules, plans, pay- roll systems, and project data. Te costs of recovery often far exceed the ransom itself once forensic investigations, data restoration, and downtime are factored in.


What Cybercrime Insurance Covers (and What It Usually Does Not) Cybercrime insurance is designed to address the unique risks of operating in today’s digital landscape. However, not all insurance policies are created equal. Understanding what is covered—and what is not—is critical for making in- formed decisions. Cyber insurance policies typically


address first- and third-party liability. First-party cyber liability insurance ap- plies to cyberattacks on the insured’s own network or systems. Third-party cyber liability insurance typically covers lawsuits following a cyberattack. Cyber insurance options typically cover the following: • Funds transfer fraud: protection against losses when cybercriminals manipulate wire instructions.


• Business email compromise response: coverage for forensic IT investigations, legal services, and remediation efforts.


• Ransomware and extortion: payment of ransom demands, negotiation services, and data recovery costs.


• Business interruption: compensation


Cybercrime insurance is designed to address the unique risks of operating in today’s digital landscape. However, not all insurance policies are created equal. Understanding what is covered— and what is not—is critical for making informed decisions.


for lost income due to downtime caused by a cyberattack.


• Data breach response: services for notifying affected parties, credit monitoring, and public relations efforts to mitigate reputational damage. It is critical that construction profes-


sionals understand that there are several key exclusions that limit cyber insurance coverage, such as: • Social engineering gaps: fraud involving voluntary transfers where deception is explicitly evident.


• Unpatched or outdated systems: policies may deny coverage if basic cybersecurity hygiene, such as software updates, is not maintained.


• Third-party vendor risks: claims arising from subcontractors or vendor platforms may be excluded unless expressly included in the policy. It is also important to note that CGL


and traditional crime policies are insuf- ficient for addressing cyber risks. CGL policies typically exclude damages related to electronic data loss, while crime poli- cies often fail to cover losses from social engineering or fraudulent instruction schemes unless specifically endorsed.


Digital Protection: Now A Cost of Doing Business For construction participants, the digital age has brought opportunities that are now fraught with risk. Ignoring these risks is no longer an option. Cyber insurance is not a luxury—it is a necessity for pro- tecting your business from financial loss, reputational damage, and operational disruption. By taking proactive steps to secure your digital infrastructure and invest in tailored cyber insurance, your com- pany will be better prepared to face the challenges presented by the modern construction landscape.


Jay Houghton


Jay Houghton is a trusted adviser to owners, developers, contractors, and design professionals, guiding clients through all phases of construction with practical, business-minded counsel and a focus on delivering successful projects.


CALIFORNIA CONSTRUCTOR MAY/JUNE 2026


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