’Warlike Action’ Exclusion Doesn’t Apply To Merck’s Cyberattack Claim (ABA Journal)

’Warlike Action’ Exclusion Doesn’t Apply To Merck’s Cyberattack Claim

  Wednesday, May 10th, 2023 Source: ABA Journal

A New Jersey appeals court ruled last week that an exclusion for ‘hostile/warlike action’ in insurance policies covering "all risks" didn’t bar a pharmaceutical company’s claim for damages in a cyberattack.

The New Jersey Superior Court’s Appellate Division ruled for Merck & Co. Inc. on May 1.

Merck’s computer and network systems were infected with NotPetya malware in June 2017 through accounting software made by a Ukrainian company. Merck said the malware caused more than $1.4 billion in losses.

The insurance defendants had contended that the exclusion for ‘hostile/warlike action’ applies when a government or a sovereign power takes action that reflects ill will or an intent to harm. In this case, the NotPetya virus was linked to the Russian Federation, the insurers said.

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