Cyber-insurance Win Highlights Importance of Insurers’ Duty to Disclose Policy Changes

Miller Friel successfully resolved an insurance dispute between its client, the Partnership for Public Service (the “Partnership”), and Hartford Insurance Company (“Hartford”). The Partnership is a nonprofit organization dedicated to honoring excellence in government service through its annual “Sammies” awards, named after the Partnership’s late founder, Samual J. Heyman.  The Partnership faced a substantial financial loss due to a fraudulent wire transfer orchestrated by cybercriminals. The Partnership submitted a claim for coverage of its loss under its cyber insurance policy, but Hartford denied the claim, relying on a recent policy endorsement that dramatically restricted the scope and limit of coverage for such losses.  The Partnership filed suit to secure coverage.

The Partnership’s complaint challenged Hartford’s reliance on the new endorsement, arguing that the restrictive endorsement never became part of the policy because Hartford had never separately advised the Partnership of the addition of the new endorsement, only inserting the endorsement toward the back of the multi-page policy.  The Partnership argued that Hartford had an obligation to notify the Partnership of any material changes to the policy, particularly of such reductions in coverage. The United States District Court for the District of Columbia agreed, denying Hartford’s motion to dismiss the Partnership’s complaint and questioning the propriety of Hartford’s conduct.  The court’s denial of Hartford’s motion paved the way for a favorable settlement, securing coverage for the Partnership’s loss.

This case demonstrates the vital role of experienced legal representation in navigating complex insurance disputes. We are proud to have obtained such a positive result for our public service client.