Court Rules for Insured in a Ransomware Insurance claim!

04 February 2020 Internet, IT & e-Discovery Blog Blog
Authors: Peter Vogel

My friend Judy Greenwald reported on BusinessInsurance.com that “A U.S. District Court ruling in Maryland that an insurer must indemnify a screen-printing business under its business owner’s policy for costs incurred in a ransomware attack may be the first of its kind concerning ransomware, and is likely to be cited frequently by other courts, some experts say.”  The February 4, 2020 article entitled “Ransomware case's impact could be far-reaching” regarding case of National Ink & Stitch LLC v. State Auto Property and Casualty Insurance Co. (Baltimore) included these comments from the Court’s Order granting summary judgment:

The plain language of the Policy contemplates that data and software are covered and can experience ‘direct physical loss or damage.’

In addition to Plaintiff’s data and software constituting covered property under the Policy’s terms, Plaintiff has also demonstrated damage to the computer system itself, despite its residual ability to function,...

State Auto seems to equate ‘physical loss or damage’ to Plaintiff’s computer system to require an utter inability to function. 

The Policy language, and the relevant case law, impose no such prerequisite,…

Judy quote me about the probability of winning a motion for summary judge:

…is very low, and so the fact that this judge ruled this way tells me the evidence in front of her was absolutely persuasive.

My expectation is that insurance for ransomware may be written differently following this ruling!

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