That’s a Wrap: Sixth Circuit Finds Coverage for Email Scam Under “Computer Fraud” Provision of “Wrap+” Policy

American Tooling Ctr v Travelers Cas & Sur Co of Am, 895 F3d 455 (CA 6, 2018) illustrates the challenges insurers face in managing the risks associated with internet-based scams.

Many business policies simply do not cover such losses. See Apache Corp v Great American Ins Co, 662 Fed Appx 252 (CA 5, 2016); Pestmaster Servs, Inc v Travelers Casualty & Surety Co of America, 656 Fed Appx 332 (CA 9, 2016). But here, Travelers’ “Wrap+” business insurance policy specifically afforded first-party coverage for losses that result from “Computer Fraud.”

Applying Michigan law in diversity, the Sixth Circuit found property coverage for losses incurred when the insured transferred funds to an online impersonator pretending to be one of the insured’s overseas vendors.

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