Safety National Casualty Corp. is seeking to have a judge tell Michaels Stores the insurer has no duty to defend the retailer in class-action lawsuits related to a data breach last year.
According to documents in the US District Court for the Northern District of Texas, Safety National told Michaels it would not pay for a defense in at least four class-action lawsuits, consolidated in the Eastern District of Illinois.
Safety National wrote a commercial general liability insurance policy for Michaels from June 2013 to June 2014.
ALSO READ: Breach affects up to 3 million cards at Michaels, subsidiary
The lawsuits against Michaels seek damages for denial of privacy protections, unauthorized charges on stolen payment cards, costs related to identity theft and “value of time” associated with monitoring accounts following a data breach at the Irving, Texas-based arts and crafts retailer.
Safety National said it would defend Michaels “because the claims in the claims-action lawsuits pertaining to the security breach do not allege ‘bodily injury,’ or ‘property damage’ or ‘personal advertising injury.’”
The case signals a continuation of companies seeking to find cyber coverage in CGL policies.
In a March bench ruling, New York Supreme Court Judge Jeffrey Oing said Zurich American Insurance Co. and Mitsui Sumitomo Insurance Co. had no duty to provide defense coverage to Sony Corp. for litigation filed after a cyber attack of Sony’s PlayStation gaming system in 2011.
ALSO READ: New York court to Sony: No personal injury coverage for you!
CGL policies provide coverage for oral or written publication of materials that violate a person’s right to privacy but the judge’s interpretation of policy language led him to declare coverage could not be triggered by anyone other than Sony.
Sony filed to appeal Oing’s ruling. Sony alleges the publication issue is “a requirement not found in the language of the insurance policies” and that Oing came to his conclusion “based on a misreading” of the policies.
ALSO READ: Coming soon to a CGL policy near you: ISO’s new data breach exclusions
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
