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Josh Mooney Discusses War Exclusions in Cyber Insurance Policies

January 18, 2019

Mondelez International Inc. is battling Zurich American Insurance Company over coverage for $100 million in losses the snack food giant suffered in a 2017 cyberattack that the U.S. and its allies blamed on Russia. Questions are now being raised as to whether a ruling permitting the insurer to invoke a war exclusion to deny the claim could leave companies uninsured for similar hacks.

Josh Mooney, Partner and Co-Chair of the Cyber Law and Data Protection Group, weighed in on the issue, commenting that Mondelez's assertion that Zurich's coverage denial is unprecedented "lacks merit." The fact that the war exclusion in Zurich's policy contains older language predating the age of cyber warfare shouldn't cut against the insurer's position, he reasoned.

"Court are frequently called upon to apply legacy language to novel sets of facts when rendering coverage decisions," Josh said. "Anyone who has litigated coverage for privacy, pollution or computer fraud claims will know that."

Josh provided further analysis, noting that intelligence officials' public conclusions about Russia's involvement in the cyberattack should be sufficient proof for Zurich to apply the exclusion.

"If anything, MDLZ effectively may have to show that the Russian government wasn't the culprit, which may be an impossible task," he continued.

Josh added that the fact that Mondelez was apparently not an intended target of the attack is irrelevant because the exclusion broadly bars coverage for any losses directly or indirectly resulting from a hostile or warlike action.

"Thus, MDLZ need not have been a target of the Russian military for the exclusion to apply. MDLZ suffered collateral damage from the attack, which also falls within the exclusion," Josh said.

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