8th Circuit Upholds Data Breach Coverage for Bank Loss Following Hacker’s Fraudulent Transfer

Ken Kronstadt and Crystal Skelton of Kelley Drye & Warren LLP write:

Last week, the Eighth Circuit upheld a lower court’s ruling in State Bank of Bellingham v. BancInsure Inc., finding that a bank employee’s negligence in securing its computer network did not preclude coverage for a data breach resulting in a fraudulent funds transfer. The decision affirms the lower court’s ruling granting summary judgment in favor of the Bank of Bellingham, holding that the loss was covered even if employee negligence contributed to the loss.