Security News > 2020 > January > Judge Rules Insurer Must Pay for Ransomware Damage

A federal judge has ruled that an insurer providing a "Business owner's insurance policy" to National Ink & Stitch, which sustained a ransomware attack in 2016 and was forced to replace most of its IT infrastructure, must pay for the damages the security incident caused.

In her recent ruling, Judge Stephanie Gallagher of the U.S. District Court of Maryland wrote that the damage to Nation Ink & Stitch's computer infrastructure from a ransomware attack constituted "Physical loss or damage" covered by the insurance policy and that the insurer must pay the costs to recover and rebuild the network.

The insurer, Columbus, Ohio-based State Auto Property and Casualty Insurance Co., had denied coverage for the cost of replacing National Ink & Stitch's computer system, arguing that that the company had not experienced "Direct physical loss of or damage to" its computer system, the judge noted in the ruling.

The judge in the case ruled that the policy would still coverage physical damage no matter how it happened or under what circumstances, says Todd Rowe, an attorney with Tressler LLP of Chicago who specializes in insurance and privacy issues but was not involved in the case.

Because the language in State Auto's insurance policy states that it provides coverage for such losses and damages, the insurer must pay for replacement of National Ink & Stitch's computer system, Judge Gallagher ruled.

News URL

https://www.inforisktoday.com/judge-rules-insurer-must-pay-for-ransomware-damage-a-13673