CONSTRUCTION DEFECT JOURNAL

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Full Coverage for Phishing Scam Not Established

August 26, 2024
Tred R. Eyerly - Insurance Law Hawaii

The California Court of Appeal affirmed the trial court's dismissal of the insured's claim for full coverage after suffering from the phishing scam. Door Sys. v. CFC Underwriting Limited, 2024 Cal. App. Unpub. LEXIS 3441 (Cal. Ct. App. June 3, 2024).

Door Systems was a leading distributer of integrated fire doors and fire protection smoke curtains. It alleged that on January 20, 2021, someone impersonating its President sent electronic correspondence to one of its clients, X-Act Finish & Trim, Inc. (X-Act). At the time, X-Act owed Door Systems $395,000. The impersonator demanded $395,000. X-Act made payment, but was later informed by Door Systems that the money had not been deposited into Door System's account. A subsequent investigation recovered $160,419.20, leaving a balance of $234,580 that Door Systems sought to recover from its insurer, CFC Underwriting Limited, under a cybersecurity policy.

Mr. Eyerly may be contacted at te@hawaiilawyer.com