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Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Cyber Policies and Issues

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Fraudulent Instruction Loss Caused by Social Engineering Scheme Does Not Trigger Computer Fraud Coverage Under Commercial Crime Policy

Posted in Cyber Policies and Issues
A Michigan federal district court has held that a fraudulent instruction loss caused by a social engineering scheme did not constitute a “direct loss” that was “directly caused by computer fraud” and therefore did not trigger computer fraud coverage under a commercial crime policy.  American Tooling Ctr., Inc. v. Travelers Cas. & Sur. Co. of… Continue Reading

Computer Fraud Coverage Extends to Manipulation of External Email Server

Posted in Cyber Policies and Issues
The United States District Court for the Southern District of New York, applying New York law, has held that a cloud-based service provider’s loss resulting from fraudulent wire instructions is covered under a computer fraud and funds transfer fraud policy because the fraudulent email changed data in the provider’s computer system despite use of a… Continue Reading

Loss Caused by Fraudulent Exploitation of Coding Error Does Not Implicate Computer Fraud Coverage

Posted in Cyber Policies and Issues
A Georgia federal district court has held that a fraudulent scheme using telephones to exploit a computer coding vulnerability in the insured’s system that ultimately led to a loss was not covered under a computer fraud provision in a commercial crime policy.  Incomm Holdings, Inc. v. Great Am. Ins. Co., 2017 WL 1021749 (N.D. Ga.… Continue Reading

Quality of Services Exclusion Bars Coverage for Online Auction Service’s Alleged Misrepresentations About Its Reliability

Posted in Cyber Policies and Issues
In another win for an insurer represented by Wiley Rein, the United States District Court for the Middle District of Florida, applying New Jersey and Florida law, has held that the quality of services exclusion in a technology errors and omissions policy barred coverage for a claim that the insured negligently misrepresented the safety and… Continue Reading

Computer Fraud Provision of Crime Policy Does Not Cover Loss from Business Email Compromise and Social Engineering Scheme

Posted in Cyber Policies and Issues
Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that a business email compromise loss involving social engineering did not “result[] directly from the use of any computer to fraudulently cause a transfer” and thus did not trigger Computer Fraud coverage under a commercial crime insurance policy.  Apache Corp.… Continue Reading

Cyber Policy Does Not Cover Indemnification Payments to Credit Card Processor After Data Breach

Posted in Breach of Contract – coverage for amounts due pursuant to contract, exclusions, Cyber Policies and Issues
In one of the first cases directly addressing the scope of coverage under a cyber insurance policy, an Arizona federal district court has dismissed an insured’s complaint seeking coverage for amounts paid to its credit card processor for assessments resulting from a data breach. P.F. Chang’s China Bistro, Inc. v. Fed. Ins. Co., No. 2:15-CV-01322-SMM… Continue Reading

Claim based on Unsolicited Text Messages in Violation of TCPA Does Not Allege a “Privacy Wrongful Act” under Policy’s “Cyber Claims Endorsement”

Posted in Cyber Policies and Issues, Wrongful Act
An Illinois intermediate appellate court has held that a cosmetic surgery center was not entitled to coverage because a claim alleging that it violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited text messages advertising its services did not allege a “privacy wrongful act” under a “cyber claims endorsement” in a medical professional liability… Continue Reading

Knowing Conduct Is Not An “Error, Omission or Negligent Act” Under Technology E&O Policy

Posted in Cyber Policies and Issues, Wrongful Act
A Utah federal district court has held there was no coverage under a technology E&O policy because an underlying complaint against two insureds alleged that they knowingly failed to provide certain customer information to the claimant, the insureds’ business customer, which did not qualify as an “error, omission or negligent act.” Travelers Prop. Cas. Co.… Continue Reading