KING OF PRUSSIA, Pa., May 31 /PRNewswire/ -- An Arizona federal judge has held that a property insurance policy covering "physical damage" covers business losses from loss of computer data, access, use and functionality, according to Mealey Publications.
The ruling came as Senior Judge Alfredo C. Marquez of the U.S. District in Arizona granted summary judgment in part for computer distributor Ingram Micro Inc. (NYSE:IM)
and denied summary judgment to American Guarantee & Liability Insurance Co., which filed the declaratory judgment action. Complete coverage of the ruling will appear in this month's Mealey's Cyber Tech Litigation Report and Mealey's Emerging Insurance Disputes.
AGLIC filed the action on April 15, 1999, after Ingram sought coverage under a property damage policy from business and service interruptions resulting from a power outage at the company's Arizona facility in 1998.
The outage shut down Ingram's computer systems and although service was restored within a half hour, three mainframe computers remained inoperable because programming in formation was lost. Connections between the Ingram Data Center and six locations in the U.S. and Europe were not restored for eight hours after the power loss.
Ingram contended that "physical damage" should include loss of use and function, and Judge Marquez agreed.
"At a time when computer technology dominates our professional as well as personal lives, the Court must side with Ingram's broader definition of "physical damage." The court finds that "physical damage" is not restricted to the physical destruction or harm of computer circuitry but includes loss of access, loss of use and functionality," the judge said in last month's decision.
"Lawmakers around the country have determined that when a computer's data is unavailable, there is damage; when a computer's services are interrupted, there is damage; and when a computer's software or network is altered, there is damage. Restricting the Policy's language to that proposed by American would be archaic."
Full coverage of this ruling will be featured in the June issue of Mealey's Cyber Tech Litigation Report. For a free sample of the report, call 1-800-MEALEYS, 610-768-7800 or news@mealeys.com
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Source: Mealey Publications
Contact: John Hayes of Mealey's, 610-768-7800
Website: http://www.mealeys.com/