Ward Gen. Ins. Ser. v. Employ. Fire Ins.

Plaintiff, Ward General Insurance Services, Inc., and defendants, The Employers Fire Insurance Company and One Beacon Insurance, filed cross motions for summary adjudication seeking the court's determination whether a first party insurance policy, issued by defendant to plaintiff, covered the loss of stored computer data not accompanied by the loss or destruction of the storage medium. [1] The court found plaintiff's loss was not covered by the insurance policy because it was not a "direct physical loss." Plaintiff appeals the adverse judgment, contending its loss was a "direct physical loss" as a matter of law. We disagree with plaintiff's argument and affirm the judgment.

Plaintiff purchased a commercial insurance policy from defendant covering the policy period of February 28, 1999 to February 28, 2000. On November 9, 1999, while plaintiff was in the process of updating its Oracle computer database, human error caused the database system to "crash," [3] resulting in the loss of plaintiff's electronically stored data used to service its clients' insurance policies. Plaintiff hired consultants to restore the database, and data was manually inputted so that plaintiff…