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

March 1, 2014Alerts

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.