Phishing has been around for decades.  But now, the long-lost ancestor claiming to be a foreign prince is stealing more than your grandmother’s savings.  Phishers are targeting corporations—small and big, private and public—stealing sensitive data and money.  When Policyholders take the bait, they had better have a tailored insurance policy to keep their insurers on the hook as well.

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Insurance partner Michael Levine is teaming up with Hunton’s Michael Perry and Adam Solomon and Jones Day’s Lisa Ropple to discuss cybersecurity litigation and insurance coverage presentation for the Massachusetts Bar Association. The presentation, sponsored by the MBA’s Complex Commercial Litigation Section, will take place on Wednesday, March 20th at 4:30 pm at the MBA’s office in Boston. Topics will include:

  • General litigation claims arising from cybersecurity incidents and defenses available to companies facing these claims.
  • Safeguards to prevent cyberattacks from outside sources.
  • Insurance coverage issues arising out of cybersecurity incidents.


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Notwithstanding the absence of a congressional war declaration since Japan bombed Pearl Harbor, Zurich American Insurance Company has invoked a “war exclusion” in an attempt to avoid covering Illinois snack food and beverage company Mondelez International Inc.’s expenses stemming from its exposure to the NotPetya virus in 2017. The litigation, Mondelez Intl. Inc. v. Zurich Am. Ins. Co., No. 2018-L-11008, 2018 WL 4941760 (Ill. Cir. Ct., Cook Cty., complaint filed Oct. 10, 2018), remains pending in an Illinois state court.
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The head of Hunton Andrews Kurth’s insurance practice, Walter Andrews, was interviewed earlier this week by ABC 7 (WJLA) concerning the need for cyber insurance and the benefits that it can provide to government contractors and other businesses that are impacted by a cyber event.  Andrews explains the diverse spectrum of benefits that are available through cyber insurance products, but cautions that a serious lack of uniformity exists among today’s cyber insurance products, making it crucial that policyholders carefully analyze their cyber insurance to ensure it provides the scope and amount of insurance they desire.

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The Sixth Circuit has rejected Travelers Casualty & Surety Company’s request for reconsideration of the court’s July 13, 2018 decision, confirming that the insured’s transfer of more than $800,000 to a fraudster after receipt of spoofed e-mails was a direct loss” that was “directly caused by” the use of a computer under the terms of ATC’s crime policy.  In doing so, the court likewise confirmed that intervening steps by the insured, such as following the directions contained in the bogus e-mails, did not break the causal chain so as to defeat coverage for “direct” losses.

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The Second Circuit has rejected Chubb subsidiary Federal Ins. Co.’s request for reconsideration of the court’s July 6, 2018 decision, confirming that the insurer must cover Medidata’s $4.8 million loss under its computer fraud insurance policy.  In July, the court determined that the loss resulted directly from the fraudulent e-mails.  The court again rejected the insurer’s argument that the fraudster did not directly access Medidata’s computer systems.  But the court again rejected that argument, finding that access indeed occurred when the “spoofing” code in emails sent to Medidata employees ended up in Medidata’s computer system.

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In a recent article appearing in Florida’s Daily Business Review (available here), Hunton Insurance Recovery Practice team head, Walter Andrews, explains why phishing and whaling scams should be covered by insurance.  In the article, Andrews notes that recent appellate decisions support policyholders’ reasonable expectations of coverage and reject insurers’ contentions that social engineering losses

In a recent post, we discussed the Sixth Circuit’s holding in American Tooling Center, Inc. v. Travelers Casualty and Surety Co. of America, No. 17-2014, 2018 WL 3404708 (6th Cir. July 13, 2018), where the Sixth Circuit reversed the district court’s summary judgment for the insurer, finding coverage under its policy for a fraudulent scheme that resulted in a $834,000.00 loss. The insurer, Travelers, has now asked the Court to reconsider its decision.

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The Sixth Circuit, in American Tooling Center, Inc. v. Travelers Casualty and Surety Co. of America, No. 17-2014, 2018 WL 3404708 (6th Cir. July 13, 2018), reversed the District Court’s grant of summary judgment in favor of the insurer in a dispute over coverage for a social engineering scheme. The policyholder, American Tooling, lost $800,000 after a fraudster’s email tricked an American Tooling employee into wiring that amount to the fraudster.

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In a July 9, 2018 article appearing in Insurance Law360, Hunton Andrews Kurth insurance recovery practice head, Walter J. Andrews, explains why the Second Circuit’s decision in Medidata Solutions Inc. v. Federal Insurance Co., No. 17-2492 (2nd Cir. July 6, 2018), affirming coverage for a $4.8 million loss caused by a “phishing” e-mail attack, is a common sense application of the plain language of Medidata’s computer fraud coverage provision.  As Andrews explained, “[c]learly, hijacking — or spoofing — email addresses constitutes an attack on a company’s computer system for which a reasonable policyholder should expect coverage. A computer is a computer is a computer. Everyone knows that — except for insurance companies.”

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