Jenner & Block

"No Duty to Defend Under Cyber Policy? – Really of No Concern," Insurance Law Update

In Federal Recovery Services, Judge Ted Stewart held Travelers’ cyber risk insurance policy—called CyberFirst®—did not afford a duty to defend against several claims made against the policyholder for intentional torts, including conversion and tortious interference. On its face, this recent decision by the Federal District Court for the District of Utah might appear to threaten the duty-to-defend rights of policyholders owning cyber risk insurance. Travelers Property Casualty Co. of America v. Federal Recovery Services, Inc., No. 2:14-cv-170 TS, slip op. (D. Utah May 11, 2015). But if the word “cyber” were removed from the opinion altogether, the decision would likely read no differently. Put simply, cyber risk insurance policyholders should feel comfortable that this opinion does not define any kind of trend as to the availability of coverage under cyber risk policies, and that this ruling is, ultimately, much ado about nothing.