Data Security, Third-Party Privacy Claims, And Insurance Coverage Under CGL "Personal And Advertising Injury" Coverage

Personal and advertising injury coverage appears in standard commercial general liability ("CGL") policies. Even though courts have been hostile to invasion of privacy claims based on data security breaches, such claims frequently are filed and are not always dismissed at an early stage. Particularly for companies that do not have specialized data security coverage, CGL coverage might provide a basis for the payment of defense costs and, if necessary, indemnity in response to such third-party claims.

For a company faced with a data breach resulting in the possible disclosure of private information, an important question is how, if at all, commercial general liability insurance will respond to third-party claims alleging damages. If your company has specialty coverage for data security loss, cybertheft, or similar liabilities, then your right to coverage might be clear.¹ If you do not have such special coverage available, however, then you might nevertheless have a