Monday, October 21, 2013

Court: Insurer Must Cover Privacy Breach, Despite Exclusions

The US District Court of Central California held that a general liability policy covered data breach claims alleging violations of California patients’ right to medical privacy. The court rejected the insurer’s contention that coverage was negated by an exclusion for liabilities resulting from a violation of rights created by state or federal acts. Also rejected was an attempt commonly made by insurers to exclude coverage for statutory penalties.

The ruling stemmed from a suit brought by patients who alleged violations of medical data privacy by their hospital, which in turn involved the hospital's insurer.

"An insurance policy’s statutory rights exclusion does not apply to data breach claims."
- Hunton and Williams, Attorneys
According to the law firm of Hunton and Williams the implications of the court's decision is "that data breach and other privacy violations should be covered under general liability insurance,and stands as the latest among a line of cases affording coverage for amounts paid as statutory penalties where those amounts are paid because of the injury sustained by the plaintiff>."

Such court decisions will heighten all stakeholders' awareness of privacy data breach liabilities. Organizations seeking proactive detection of breaches can utilize low-cost on-demand SaaS analytics.

Download a white paper on patient privacy breach detection. Learn how to proactively identify unauthorized breaches of patient data privacy, even by authorized users - with no hardware and no on-site software.
(a) Insurance Policy's Statutory Rights Exclusion Does Not Apply to Data Breach Claims -, 10/07/

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