Recent Cyber Insurance Decision Rejects Claim For Computer Fraud

A federal judge in Michigan recently granted summary judgment to Travelers in American Tooling Center, Inc. v. Travelers Casualty and Surety Company of America, Case No. 16-12108, United States District Court, Eastern District of Michigan.  That decision interpreted the "computer fraud" provision of Travelers' insurance policy, finding no coverage for the insured for the losses claimed.

The basic facts were that American Tooling asked its vendor in China, YiFeng, for all outstanding invoices by email.  American Tooling received a response by email, from an account that looked very much like the YiFeng account, and which directed American Tooling to send payment for the invoices to a new bank account.  Unfortunately, the email was fraudulent, and $800,000 was wired to the fraudster without verifying the banking instructions.