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Chubb unit ordered to cover ransomware reimbursement

Posted On: Dec. 8, 2022 12:29 PM CST


A federal district court has ruled against a Chubb Corp. unit and held that a Portland, Oregon, beverages and sauces manufacturer is entitled to the more than $107,000 it reimbursed its president after he made a ransomware payment out of his personal cryptocurrency funds.

Yoshida Foods International LLC purchased insurance from Chubb unit Federal Insurance Co. that included computer fraud coverage under the crime coverage part of its policy, according to Monday’s ruling by the U.S. District Court in Portland in Yoshida Foods International LLC v. Federal Insurance Co.

In March 2021, an anonymous hacker gained unauthorized access to Yoshida’s computer system and used malware to encrypt data in its storage devices, rendering the system unusable, according to the ruling. 

The hacker demanded a ransomware payment in cryptocurrency in exchange for each decrypting program. Yoshida President Junki Yoshida used his personal cryptocurrency funds to pay $107,074.20 for the four decryption keys needed, for which he was later reimbursed by the company.

Federal denied coverage, arguing the company did not sustain a “direct loss” from computer fraud, with its only loss occurring when it reimbursed the company president, who was not personally insured under the policy.

The court disagreed.

“Both the ransom payment made by Mr. Yoshida and the reimbursement of that amount by Plaintiff was proximately caused by the hacker’s computer violation directed against Plaintiff’s computer system,” the ruling said.

“There was no intervening occurrence between the ransomware attacks, the ransom payment, and the reimbursement to Mr. Yoshida, which were all part of an unbroken sequence of events.  Plaintiffs’ reimbursement of the $107,074.20 was a foreseeable result of the attack.”

Whether Mr. Yoshida made the ransomware payment, or the company reimbursed him, was “irrelevant,” the court said, in granting Yoshida summary judgment on the issue. 

Attorneys in the case did not respond to requests for comment.