Tech Ruling Could Cost Insurers

A federal judge's recent ruling that loss of computer use is equivalent to "physical damage" and is thus covered under standard property policies could significantly impact computer-related claims disputes if it withstands appeal, industry officials say. The summary judgment handed down by the U.S. District Court for the District of Arizona involves a dispute between Ingram Micro of Santa Ana, Calif., a major distributor of computer products, and American Guarantee & Liability Insurance Company in Schaumberg, Ill., a subsidiary of Zurich Financial Services. According to the judgment document, American issued Ingram a property damage policy that insured against "certain business interruption and service interruption losses." After the policy was in force, Ingram experienced a power outage on Dec. 22, 1998, apparently caused by a ground fault in a fire alarm.