“Barracuda Hack May Highlight Cyber-Linked Property Damage”, Law360 Insurance Authority quotes Kaufman Dolowich Partner Avery Dial, 6-20-2023

Article by Law360’s By Daniel Tay

A malware incident at cybersecurity vendor Barracuda in which it advised clients to physically replace security hardware to counter the threat could weaken insurers’ arguments about cyberattacks not being able to…  

...a situation like Barracuda’s is distinguishable from EMOI because the Barracuda situation involves the actual functioning of a physical device, as opposed to the integrity of software or data independent of the functionality of the physical device in EMOI, said Avery Dial, a partner with Kaufman Dolowich & Voluck LLP.

…the court’s final analysis held that the damage to the software is only covered if the physical media that contains it is physically damaged, Dial said. …”If you’ve got damage to information on a hard drive, and the hard drive’s not damaged, it’s really the information you care about. Because theoretically, you could just wipe that hard drive and use it again,” Dial said. “But here, you’ve got a device that you can’t use anymore for its intended purpose of being an email gateway.”

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