United States District Court, District of Alaska (2022)
In City of Unalaska v. National Union Fire Insurance Co., 591 F. Supp. 3d 440 (D. Alaska 2022),
the district court held that under Alaska state law, a Computer Fraud Insuring Agreement in an
insurance policy covered financial losses due to fraud perpetrated over email. (Id. at 453.) A
fraudster defrauded the city government out of over $2 million by impersonating a vendor over
email. (Id. at 442). The fraudster had the city reroute payments from the real vendor to the
fraudster. (Id. at 442–43). The city was able to recover most of the stolen funds but had over half
a million dollars outstanding, for which it sought insurance coverage from National Union. (Id. at
443). The city argued that the Computer Fraud Insuring Agreement (CFIA) in its policy covered
fraud perpetrated over email and should, therefore, cover the remaining unrecovered losses. (Id.).
The district court decided this case using Alaska state law principles for interpreting insurance
standards. (Id. at 445). The court explained that a reasonable insured party would have expected
the CFIA to cover losses of money from a fraudster’s illegal email conduct, such as in this case.
(Id. at 451). The plain language of the CFIA, specifically its coverage of fraud that resulted directly
from the use of a computer, supported the city’s understanding that money lost due to fraud
perpetrated over email would be covered under the policy. (Id.). The district court granted the
city’s motion for summary judgment, concluding as a matter of first impression that the CFIA did
cover financial losses from fraud perpetrated over email. (Id. at 453).