Second Circuit Pushes Insurer on Computer Outage Coverage

A federal appeals court grilled a Hanover Insurance Group Inc. unit on policy language that could determine whether expenses incurred by Arizona Beverages USA LLC as a result of a 2017 computer system outage were covered.

In a Tuesday hearing, Hanover Insurance Co. argued the policy only covered “extra expenses” resulting directly from damage to “covered equipment"—in this case, hardware affected by a power surge—not “property” damage resulting from the initial damage to the covered equipment.

But a panel of judges on the US Court of Appeals for the Second Circuit appeared skeptical.

“You’re misreading 5(a),” Judge Richard L. Sullivan ...