One of the biggest data breaches of all time involved that of Sony Corp. The hackers stole confidential information from tens of millions of Sony PlayStation Network users. Despite this humongous breach, something surprising happened: New York Supreme Court Jeffrey Oing ruled that Mitsui Sumitomo Insurance Co. and Zurich American Insurance Co. owed NO defense coverage to Sony Corp. or Sony Computer Entertainment America LLC.
It seems, then, in order to get coverage, Sony itself would have to do the hacking. “They’re being held liable even though the wrongdoing was done by a third party,” explains Robin Cohen to Law360. Cohen heads a law firm that handles insurance recovery.
To determine coverage obligations, Zurich filed a lawsuit against Sony, which had to shut down its PlayStation Network for a month.
Oing’s ruling will likely motivate companies to obtain policies that specifically insure against data breach claims. However, many companies believe that such specific insurance is already built into their current general liability policy.
Insurers all across the nation are wanting to put language in their policies that exclude coverage of losses stemming from data breaches, which include loss of credit card information. However, courts have the final say-so in just how far these exclusions can go.
Companies need to seriously consider cyber insurance policies that specialize in coverage of data breach losses.
K&L Gates LLP partner Roberta Anderson told Law360, “Irrespective of whether the Sony trial court’s view is widely adopted, it’s ill-advised for policyholders to rely on general liability policies for data breaches.”
It’s expected that Sony, which has strong arguments for their appeal according to policyholder attorneys, will challenge Oing’s decision.
Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.
ROBERT SICILIANO, CEO of IDTheftSecurity.com is fiercely committed to informing, educating, and empowering Americans so they can be protected from violence and crime in the physical and virtual worlds. His "tell it like it is" style is sought after by major media outlets, executives in the C-Suite of leading corporations, meeting planners, and community leaders to get the straight talk they need to stay safe in a world in which physical and virtual crime is commonplace. Siciliano is accessible, real, professional, and ready to weigh in and comment at a moment's notice on breaking news.
- Cyber Security Insurance Difficult for Business to Navigate
Cyber insurance is now booming, with about 50 carriers in the industry. An increasing number of companies have cyber insurance to protect against cyber crime. However, businesses claim it’s not easy to get adequate coverage. Losses from data breaches are difficult to quantify. The tangible losses are more easily insured, says a New York Times online
- SEC comes down on Breached Companies
If you’re wondering if businesses, who’ve been targets of cybercrime, have been properly handling the fallout, you have company: The U.S. Securities and Exchange Commission. The SEC is investigating this very issue. Key Questions Include: Did the businesses adequately protect data? Were investors properly notified about the breach’s impact? One of the companies being investigated is Target Corp. The SEC,
- How Device Reputation Can Help Prevent Fraud in the Insurance Industry
Insurance companies, like banks and retailers, are forced to deal with a wide spectrum of fraud, which costs the industry and its customers billions of dollars each year. According to the Insurance Fraud Bureau, “Undetected general insurance claims fraud total £1.9billion a year adding on average £44 to the annual costs individual policyholders face, on
- Another Way to Investigate Insurance Fraud
Insurance fraud has been around since the dawn of the insurance policy, largely due to its reliance on the honor system. It’s fairly easy to file and process a fabricated claim—just a matter of filling out paperwork online, really. While there are certainly some checks and balances in the claim investigation process, there are often
- Organized Crime Drives Increasing Auto Insurance Costs
All over the world, insurance fraud equates to a multi-billion dollar issue. The Guardian reports that in the United Kingdom, “insurance fraud [has] been on the rise since the recession began. Figures to be published by the Association of British Insurers (ABI) are expected to show that these are still on the rise. As it is, the ABI