Skip to main content

Q1 2022

Legal roundup

A US court has granted insurers an appeal against a 2021 ruling that a war exclusion clause that excluded “hostile acts” did not apply to a cyberattack alleged to have been instigated by a nation-state.
Law and Order, legal symbol the Scales of Justice.

A US court has granted insurers an appeal against a 2021 ruling that a war exclusion clause that excluded “hostile acts” did not apply to a cyberattack alleged to have been instigated by a nation-state.

A Superior Court decision in December 2021 found that as a matter of policy interpretation, the hostile acts exclusion in the property insurance policy in question did not apply to a nation-state cyberattack because it is not a “traditional form of warfare”. The property policy was thought to be “silent” on cyber. The insured (a large multinational pharmaceutical firm) was claiming coverage for replacement of computer equipment following the “NotPetya” virus in 2017, which is widely thought have been sponsored by Russia.

The insurers’ appeal is based on the fact that the “hostile acts” exclusion does not contain the words “traditional form of warfare” but refers to loss arising from “hostile or warlike action in time of peace or war”. Insurers’ are also arguing that although the original trial court invoked the “reasonable expectations” and “contra proferentum” doctrines, these are designed to protect unsophisticated insureds who have no bargaining power, which insurers argue does not apply in this instance.

Q1 2022

Energy & Power Insurance Quarterly Newsletter

 

Previous editions