General Liability Insurance Does Not Cover Computer Damage Caused By Defective Software

The United States Court of Appeals for the Fourth Circuit has ruled that a general liability insurance policy does not cover alleged damage to computers caused by defective computer software. In so ruling, the Fourth Circuit affirmed a district court?s holdings that destruction of computer data does not constitute physical damage to tangible property and that the loss of use of computers is excluded from coverage by the impaired property exclusion in the policy. The America Online case is the first appellate court decision ? federal or state ? to address squarely these issues under a general liability insurance policy. This article give details of the Fourth Circuit that affirmed a district court?s holdings that destruction of computer data does not constitute physical damage to tangible property and that the loss of use of computers is excluded from coverage by the impaired property exclusion in the policy.

Provided by: Shaw Pittman Topic: Date Added: Oct 2003 Format: PDF

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