If you are hit with a ransomware attack that ends up damaging your computer system, your insurance policies, including your general business policy, may cover more than you expect. A recent Maryland case ruled that a general business insurance policy, which covered “direct physical loss or damage to Covered Property,” applied to the situation where the damaged computer system still functioned but at a diminished capacity due to the aftereffects of the ransomware attack. The court in National Ink and Stitch, LLC v. State Auto Property and Casualty Insurance Co. ruled that ransomware can cause direct physical loss to data and software and that “loss of use, loss of reliability, or impaired functionality” fall into the “physical loss or damage clause.” The computer in this case did not need to be completely inoperable. When hit by ransomware, a business should check all of its insurance policies. When acquiring insurance, a business should obtain a cyber insurance policy and look closely at the language of the general business policy for appropriate coverage.
Ned T. Himmelrich
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