On October 2, 2023, the NAM filed an amicus brief urging the New Jersey Supreme Court to affirm the Appellate Division’s determination that Merck’s insurers improperly denied coverage for losses arising out of a cyberattack. In this case, Merck sought coverage for losses from the 2017 NotPetya cyber event under its "all risk" property policies. The policies contained an express grant of coverage for electronic data corruption or destruction, including broad business interruption coverage. Nevertheless, the insurers denied coverage, contending that standard-form “war” exclusions—developed by the insurance industry years before cyber-risks emerged—barred coverage. The trial court and Appellate Division agreed with Merck that, by its plain language, the war exclusion was limited to situations involving the use of armed forces, and therefore did not apply. The instant appeal followed.
The NAM’s amicus brief underscores the significant threat posed by cyber risks to businesses of all sizes and across all industrial sectors. By developing and employing consistent rules of interpretation, New Jersey courts have created an environment in which policyholders can conduct business and prepare for cyber risks in a predictable and reasonable manner. The NAM further explains that the result advocated for by the insurance industry would undermine core principles of insurance policy interpretation that are critically important to manufacturers seeking coverage under policies purchased at considerable expense.
The case was resolved by the parties prior to oral argument.