Data Compromise Insurance

Several insurers are offering special coverage for liability arising out of the loss of personal information that was in the insured’s care, custody, and control.

Claims can come at you from two events. First there is the loss of data caused by a hacking event; a failure in your security allows an outside party to access your customer/employee data. Second, there is the physical theft or loss of a computer or disc that contains data.

In both cases the suit is brought by persons who’s information was included in the hacking or theft – your employee or customer, for example.

The product is not widely used as of now and there may be coverage under some general liability policies – under the personal injury coverage for violation of privacy. Insurers are adding coverage limiting endorsements to existing policies and the courts will interpret the current policy language.

Another reason to review your insurance and have a frank conversation with your insurance adviser about exposures to loss.