Texas Appellate Court Addresses Whether First-Party Property Policy Covers Losses From A Hacker Attack
- Topics:
- Property
- Tags:
- Business Operations,
- Computer,
- Computer Data,
- Corporate Insurance,
- Hacker Attack,
- Insurance,
- Policyholder,
- Productivity,
- Shaw Pittman
- Source:
- Shaw Pittman
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Overview: In a recent decision, a Texas intermediate appellate court ruled that a first party property insurance policy might cover lost computer data and lost business income resulting from a hacker attack. The policyholder was an employment agency that matched prospective employers and employees for a fee. In February 2000, the policyholder’s computer system “froze up”; computer data could not be retrieved, and new information could not be loaded into the computer. The policyholder filed a claim with its property insurer for lost business income and for the expenses to replace a computer server and computer data. The policy provided coverage for “accidental direct physical loss to business personal property at the premises” described in the policy. The insurer argued that the “physical loss” requirement had not been met because the data on the policyholder’s computer did not exist in a physical or tangible form. The court The Lambrecht opinion should have only a limited impact because it does not address satisfactorily the requirement of a “direct physical loss.” Indeed, the court sidestepped this issue, and instead, it just identified policy provisions that extended covered property to records that exist on “electronic or magnetic media.”
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Format: PDF | Size: 77KB | Date: Jul 2003 | Pages: 2
