Insurance Policy Does Not Cover Ransomware Attack on Software, Ohio Supreme Court Says

The Ohio Supreme Court has unanimously overruled a judgment of the Ohio Second District Court of Appeals and moved that there must be "direct" physical loss or physical damage in the company's computer software for insurance policy coverage. From a report: In the three-year court proceedings between the greater Dayton medical billing software maker EMOI and its insurance service provider Lansing, Michigan-based Owners Insurance Company, the latter asserted that the insurance contract unambiguously stated only "direct physical loss" or "direct physical damage" to media would be covered under the insurance policy. The court in its final ruling gave the rationale that a computer might have physical electronic components that are "tangible" in nature but the information stored there has no "physical presence"; thus a ransomware attack on the company software has no coverage under the company's insurance policy. The judgment against EMOI concludes that a software developer can't use its property insurance to cover losses. A district judge had dismissed EMOI's case against Owners, which the developer brought forth just months after the attack. But the appellate court in November 2021 had ruled in favor of EMOI stating that the claimant could sue the insurance company for allegedly treating its claim in bad faith by failing to properly examine "the various types of damage that can occur to media such as software."

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