Why Arbitration Clauses May Make Sense in Cyber Insurance Policies

In this Article, we will argue that policyholders should ask for an arbitration clause in their cyber policies and negotiate over the terms. We will also argue that insurers should offer more options in this space. In this regard, modular arbitration clauses can prove useful for both sides and lead to an effective dispute resolution mechanism for dealing with what may turn out to be a flood of cyber coverage disputes. We will start with a discussion of the principal objections policyholders often have to mandatory arbitration clauses.

Then we will discuss why some of these objections may cut differently for policyholders with cyber risks. Finally, we will discuss some of the options the cyber insurance market place could offer.