03.07.14

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Two Recent Decisions Highlight Shrinking Traditional Insurance for Data Breach Liability, Consideration of New Policies

In the war between businesses and hackers, data breach losses present potentially astronomical legal exposure and business expense, for which insurance would be very helpful.  Any company that collects private information for customers or employees is at risk.  Court decisions about whether existing comprehensive general liability (CGL) insurance – the type most businesses purchase — will cover liability for such losses are just beginning to emerge.  Two such cases have been decided in the past two weeks in New York and Seattle that restrict CGL coverage for different reasons and point the way toward consideration of new policies specifically aimed at covering data breach liability.

Riddell Williams’ policyholder coverage attorneys believe that a path to coverage for data breach claims under Washington law may still be found in CGL policies in the right circumstances, but the opportunity for traditional coverage is narrowing.  New exclusions are in the works for 2014 policies to broadly eliminate data breach liability from CGL policies.  Having experienced insurance attorneys analyze your potential coverage for a data breach could save your business thousands, if not millions, of dollars. If your company’s future CGL policies include the new exclusions for data loss, consider whether your data loss liability risk warrants purchasing specific data loss insurance policies.  Riddell Williams is well positioned to assist your evaluation of legal risk for data breach and appropriate responses.

To continue reading about these important developments with data breach insurance, click here.