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New York Law Journal Publishes Article by Jeremy King on Computer Fraud Insurance

October 23, 2017

The New York Law Journal (subscription required) published an article authored by Olshan Litigation partner Jeremy King entitled “When Computer Fraud Is Not ‘Computer Fraud,’” in which he details a form of computer fraud that businesses often overlook when purchasing crime insurance. “Many companies purchase crime insurance policies,” he explains, “to cover risks and potential losses that may arise if they are victims of criminal activity. Often, that coverage protects against ‘Computer Fraud,’ …[but] using email for business operations exposes a company to losses that may not qualify as ‘Computer Fraud.’ Surprisingly, many courts have found that ‘Computer Fraud’ coverage does not apply to a common form of Internet fraud—the email scam—and coverage will depend upon the state's law that applies to the policy.” What businesses as well as individuals must remember, Mr. King clarifies, is that the insurance industry has historically excluded from its crime insurance policies loss resulting from voluntary parting: “In plain English, this means that an insurer will not pay for loss when a con artist uses lies to induce the policyholder to hand over property. [Moreover,] ‘Computer Fraud’ insurance policies seldom include a voluntary parting exclusion.” After citing several cases wherein a company’s insurance policy did not cover email fraud, Mr. King concludes, “It is only through clear and conspicuous language in an insurance policy that policyholders can adequately assess the risks they face, review the coverages available on the market, and make truly informed decisions about the insurance they purchase.”  


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