How Ohio Software Ruling Implicates Crypto Insurance Claims

In the last week of December 2022, the Ohio Supreme Court published a much-anticipated decision in the EMOI Services LLC v. Owners Insurance Co. case. The decision was bold, and the court made no attempt to limit its holding to the facts or language at issue in EMOI.

Rather, the court announced a bright-line rule: Software can never be physically damaged.

As cryptocurrency and non-fungible tokens are stored on open-source software known as the blockchain, this ruling has obvious implications for the loss of these intangible assets.

The policyholder in EMOI had not purchased a cyber insurance policy. Rather, it purchased a business owners’ policy that included data compromise and electronic equipment endorsements.

Based on name alone, one might have expected the data compromise endorsement to respond to loss arising out of a ransomware attack. However, both the policyholder and the insurer agreed that the policy’s exclusion for loss arising out of any "threat, extortion or blackmail" rendered this endorsement inapplicable.