War exclusion doesn’t prevent Merck’s $1.4 billion cyber loss

By Daphne Zhang (January 14, 2022, 8:38 PM EST) – Property policy wartime exclusions do not apply to cyberattacks, a New Jersey state court has ruled, siding with the position of the pharmaceutical giant Merck Inc. that its insurers cannot assert the exclusion to avoid coverage of its losses of more than $1.4 billion from a 2017 cyberattack.

Merck alleges that 15 carriers breached insurance contracts by refusing to cover the drug company’s losses from a malware attack in June 2017 under its $1.75 billion insurance policies. (AP Photo/Seth Wenig) State Superior Court Judge Thomas J. Walsh accepted Merck’s offer for partial summary judgment, finding that the war exclusion only excludes a physical act of war instead of a…

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