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🚫 '''Infrastructure failure exclusion''' is a [[Definition:Policy exclusion | policy exclusion]] found in various [[Definition:Commercial insurance | commercial insurance]] and [[Definition:Cyber insurance | cyber insurance]] policies that removes coverage for losses arising from the failure of critical shared infrastructure — such as power grids, telecommunications networks, internet backbone systems, or cloud computing platforms — when the failure is not caused by the [[Definition:Insured | insured's]] own actions or a covered peril. In insurance, this exclusion addresses the systemic nature of infrastructure dependencies: when an electrical grid collapses or a major cloud provider suffers an outage, the resulting losses can simultaneously affect thousands of policyholders, creating [[Definition:Aggregation risk | aggregation risk]] that [[Definition:Insurance carrier | carriers]] find difficult to absorb without explicitly managing the exposure.

⚙️ The exclusion typically operates by defining what constitutes "infrastructure" — often referencing utilities, public communications networks, satellite systems, and sometimes third-party technology platforms — and then excluding losses that stem from the disruption, degradation, or failure of those systems unless the disruption results from a specifically covered cause such as a named [[Definition:Cyber attack | cyber attack]] directed at the insured. Some [[Definition:Underwriter | underwriters]] draft the exclusion broadly, while others offer narrower carve-outs or optional [[Definition:Buyback | buyback]] endorsements that restore partial coverage for certain infrastructure scenarios. In the [[Definition:Cyber insurance | cyber insurance]] market specifically, the line between an excluded infrastructure failure and a covered third-party service provider incident can be contentious, and [[Definition:Claims | claims]] disputes frequently turn on whether a cloud provider outage qualifies as "infrastructure" or as a "service provider failure" covered under [[Definition:Contingent business interruption insurance | contingent business interruption]] extensions.

📊 Carriers and [[Definition:Reinsurance | reinsurers]] regard infrastructure failure exclusions as essential tools for managing [[Definition:Catastrophe risk | catastrophic accumulation]]. Without them, a single widespread power outage or cloud platform disruption could trigger simultaneous claims across an entire book of business, threatening portfolio solvency. Regulators in markets governed by [[Definition:Solvency II | Solvency II]] and similar [[Definition:Capital adequacy | capital adequacy]] frameworks increasingly expect insurers to demonstrate that they understand and control such correlated exposures. For policyholders, the practical consequence is that [[Definition:Business continuity planning | business continuity planning]] cannot assume insurance will respond to every external infrastructure disruption — careful review of [[Definition:Policy wording | policy wording]] and negotiation of [[Definition:Endorsement | endorsements]] are critical during the placement process.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Cyber insurance]]
* [[Definition:Aggregation risk]]
* [[Definition:Contingent business interruption insurance]]
* [[Definition:Policy exclusion]]
* [[Definition:Systemic risk]]
* [[Definition:War exclusion]]
{{Div col end}}

Definition:Infrastructure failure exclusion - Revision history

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