Legal Seminar, Chicago, IL

Coverage for Hacking

 Computer fraud provisions in policies

 “We will pay for loss of, and loss from damage to, money, securities and other property resulting directly from the use of any computer to fraudulently cause a transfer of that property from inside the premises or banking premises . . . ”

State Bank of Bellingham

 Insurance company argued voluntary employee conduct—lax security—was the real cause of the unauthorized wire transfer  Eighth Circuit: “‘[T]he efficient and proximate cause’ of the loss in this situation was the illegal transfer of the money and not the employees' violations of policies and procedures. . . . [B]ased on ‘the climate of Minnesota, water infiltration is certain when not prevented by proper construction,’ and therefore the water damage. . . was ‘the inevitable physical loss.’ . . . Unlike the water damage . . . an illegal wire transfer is not a “foreseeable and natural consequence” of the bank employees' failure to follow proper computer security policies, procedures, and protocols .”