Q

Computer equipment belonging to our commercial property insured was recently damaged by the “Monkey B Virus.” The equipment is covered on ISO open perils causes of loss form CP 10 30 04 02. The insurer has denied the claim, citing the exclusion of “any quality in the property that causes it to damage or destroy itself.”

We don't think that a virus is such a quality. May we have your opinion?

Minnesota Subscriber

A

You are correct. A computer virus does not meet the definition of a “quality in the property that causes it to damage or destroy itself.” This is the definition of “inherent vice.” Other events excluded along with “inherent vice” are rust, corrosion, fungus, decay, deterioration, [and] hidden or latent defect. These are all things that will occur over time and, as such, are uninsurable.

The classic example of inherent vice is rubber. If you leave a tire sit in the garage, it will eventually break down. The rubber destroys itself.

But a computer virus is nothing like any of these. A computer virus is introduced externally to the computer. It is an act of vandalism. Since vandalism is not excluded by the CP 10 30, the loss is covered.