In Metro Brokers, Inc. v. Transportation Insurance Company, Inc. Civil Action no. 1:12-cv-3010-ODE, (2013), the United States District Court for the Northern District of Georgia applied Georgia contract law to find no coverage under an all-risk insurance policy for an unauthorized withdrawal of almost $200,000 from Metro Brokers' online bank account by hackers who accessed the account with information obtained after embedding a virus onto Metro Brokers' computers.
The court granted summary judgment to the insurer, Transportation Insurance Company (TIC), first finding that the policy's "Forgery and Alteration" endorsement applied only to "negotiable instruments" and that the online electronic transfer did not constitute a negotiable instrument under state or federal law. The court then concluded that the policy's broad "malicious code" and "system penetration" exclusions supported denial of the claims. The court noted that TIC offered other policy endorsements, not purchased by the plaintiff, intended to cover funds lost due to unauthorized electronic transfers.
As the risks of computer hacking grow, insureds would be well advised to review their policy language to determine whether the risks they wish to insure are covered under the provisions of their existing coverage.