The “war” exclusion has gotten more attention over the past couple of weeks in light of Russia’s invasion of Ukraine. For good reason. This exclusion, common in property and liability policies alike, typically eliminates coverage for losses caused by “hostile or warlike action” from a nation-state or its agencies, or by military forces. Insurers have recently invoked this exclusion in an attempt to avoid providing coverage for losses arising from Russia’s 2017 “NotPetya” cyberattack against Ukraine, which spread beyond Ukraine’s borders and caused widespread damage to computer systems, including hardware, at a number of companies around the world.
A New Jersey court recently rejected an insurer’s reliance on a “war” exclusion in a property insurance policy, under which the insured had sought coverage for losses caused by the NotPetya cyberattack. See Merck Co. Inc. et al. v. ACE American Insurance Co. et al., Case number UNN L 002682-18, in the Union County Superior Court of New Jersey.
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