Samantha Southall, a shareholder in our Litigation section in Philadelphia, recently penned a column for FC&S Legal’s Eye on the Experts titled, "Fourth Circuit Holds That Data Breach is Covered by Commercial General Liability Policy."
In an unpublished opinion issued on April 11, 2016, the U.S. Court of Appeals for the Fourth Circuit held in The Travelers Indemnity Co. of Am. v. Portal Healthcare Solutions, L.L.C., that Travelers must defend a medical records company, Portal Healthcare, in a putative class action pending in New York state court alleging data breaches.
"The Fourth Circuit’s decision is a departure from the approach of other courts, which have held that a traditional commercial general liability policy does not cover damages from data breaches. Most importantly, however, this case highlights that as more and more companies incur significant expenses and become the targets of lawsuits as a result of data breaches, it is essential that all companies revisit their insurance coverage to determine whether such a data breach is covered by an existing, traditional policy or if they need additional, more specialized coverage."
A PDF of the article is available here