Q

Our client's computer was vandalized by installation of the Michelangelo virus that destroyed all his data on the hard drive. We submitted a claim to the company writing the data processing policy. They turned it down based on the wording that erasure of electronic recordings is excluded.

We contend that the cause of loss was not “erasure of electronic recordings.” Rather, it was vandalism.

North Carolina Subscriber

A

When the Michelangelo virus attacked your insured's computer, the result was erasure of the data. This manuscripted  policy says that it does not pay for “loss, damage, or expense” that is caused in any way by “erasure of electronic recordings.” What causes the erasure is immaterial. Both the erasure and any additional expense arising out of it are not covered.

If we call the installation of the virus “vandalism” (a peril that is not excluded), that still doesn't matter. The loss (economic loss) was caused by the “erasure of electronic recordings” and is not covered.

The insurer has eliminated any exposure to payment for “erasure” by the insertion of this “concurrent causation” language.