Hunton Insurance Recovery Blog

A Maryland federal court recently awarded summary judgment to National Ink and Stitch, finding coverage for a cyber-attack under a non-cyber insurance policy after the insured’s server and networked computer system were damaged as a result of a ransomware attack.  We discussed the significance of the decision in a January 27 blog post that can be found here.

On January 27, Hunton Andrews Kurth insurance practice head, Walter Andrews, commented to Law360 about the decision’s significant impact on the availability of coverage for ransomware and other cyberattacks, noting that the ruling illustrates why companies that experience cyberattacks should review and consider making claims under “all potential insurance policies and not just ones that are so-called ‘cyber’ policies.’”  Andrews commented specifically concerning the court’s acknowledgment that coverage is available for a computer system that is damaged but not completely inoperable, noting how impairment “more closely tracks the real world of computer attacks.”  Andrews’ comments to Law360 can be found here.

On February 4, Hunton Andrews Kurth insurance partner, Michael Levine, discussed the decision with Business Insurance and, in particular, the decision’s practical implications and erosion of the frequent argument by insurers that property insurance requires total destruction or disablement.  Levine noted, the court’s decision says otherwise.  As Levine explained, “[t]he court found that the impairment of the computer system, even though it was still functional, was sufficient to constitute a loss under the policy.” “The fact that the computer system was not totally disabled did not negate coverage. Insurers argue time and again that if the property is still functional, then it hasn’t suffered a direct physical loss, and the court rejected that.”  Levine’s comments to Business Insurance can be found here.