Hunton Insurance Recovery Blog

Last week, the Ohio Supreme Court ruled in EMOI Services, L.L.C. v. Owners Ins. Co., 2022 WL 17905839 (Ohio, Dec. 27, 2022), that a policyholder did not suffer direct physical loss of or damage to computer media that was encrypted and rendered unusable.  The Court reached its ruling even though “media” was defined in the policy to include “computer software,” concluding that software does not have a “physical existence.” The Supreme Court’s decision reverses an Ohio appellate court’s earlier ruling that the cyberattack triggered coverage under a commercial property insurance policy and builds upon plainly distinguishable rulings in COVID-19 business interruption cases, such as Santo’s Italian Café, L.L.C. v. Acuity Ins. Co., 15 F.4th 398, 402 (6th Cir. 2021), where the Sixth Circuit found that government orders issued in response to the COVID-19 pandemic did not physically alter insured property.