Policyholders should always consider the potential for coverage under their CGL policies if they suffer a data security breach. However, as the cases described in my article for Corporate Counsel, coverage is highly fact-dependent and subject to interpretation by the courts even in the absence of a data-related exclusion. The addition of such an exclusion narrows the policyholder’s options.
As a result, policyholders should carefully consider their insurance programs and the unique risks that their businesses face in light of their own computer systems, third-party computer systems on which they rely and the data they collect and/or hold. They should consider whether technology errors and omissions liability or cyberinsurance would more effectively address their risks. With the help of their insurance brokers and counsel, companies can negotiate and tailor those policies to their risks and exposures relating to computer systems, personally identifiable information and confidential third-party business information. Some businesses may choose to rely exclusively on their CGL policies for protection against data breach lawsuits. But that decision should be made deliberately after understanding all the risks and options.
Read the full article: Data Security Breach Liability: Is Your Business Covered?