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Food Company Sues Insurer After Rejected Claim for Cyberattack Ransom

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In a complaint filed by Yoshida Foods last month, and removed to federal court Tuesday, the Oregon-based food company alleged that their insurer failed to cover the ransom that it paid after suffering a ransomware attack, even though the policy at issue covered losses from computer fraud.

The complaint, originally filed in Multnomah County Circuit Court but removed to the District of Oregon, explained that Yoshida suffered a ransomware attack in March of this year and paid $100,000 to the perpetrators as well as an additional fee to an IT services company which it used to help manage the attack.

The company said they made a claim with their insurer, Federal Insurance Company, which was rejected in June. According to the complaint, the insurance company denied the claim because while the claimant could not use its systems for a period of time, it did not suffer permanent loss of assets directly resulting from the violation. The insurer also explicitly excluded the ransom payment from coverage under a Fraudulent Instruction Exclusion.

Yoshida alleged that these actions resulted in a breach of contract and a covenant of good faith and fair dealing, and is seeking restitution of their damages as well as costs and fees. They are represented by Parsons, Farnell & Grein LLP. Federal Insurance is represented by Gordon Rees Scully Mansukhani LLP.

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