Fourth Circuit Confirms Coverage For Data Breaches Claims Under Traditional CGL Insurance Policies

In a highly anticipated decision, the Fourth Circuit has ruled that commercial general liability ("CGL") insurance policies provide defense coverage for class action lawsuits arising from a data breach. The decision, Travelers Indemnity Company of America v. Portal Healthcare Solutions, LLC, Case No. 14-1944, could open the door for coverage under CGL policies for companies that are victims of similar data breaches.

For almost two decades, CGL policies have covered claims alleging privacy violations due to disclosure of electronic data over the internet. The coverage is found in the Personal and Advertising Injury Section, where one of the covered offenses is: "publication, in any manner, of material that violates a person's right of privacy."