Why You Shouldn't Count On General Liability To Cover Cyber Risk

By Ericka Chickowski  Posted on 10/20/2014
 
Travelers Insurance's legal spat with P.F. Chang's over who'll pay breach costs will likely illustrate why enterprises shouldn't think of their general liability policies as backstops for cyber risk.
 As the legal troubles for P.F. Chang's restaurant chain kept piling up over thebreach discovered this summer affecting 33 of its locations, its legal team made an insurance end-around play that many enterprises try after a breach. It filed a claim for coverage under its comprehensive general liability (CGL) policy. But a lawsuit filed earlier this month from its general liability insurer, Travelers Insurance, offers a good lesson to organizations on why this ploy rarely works.
Travelers asked the US District Court in Connecticut to clear it of any obligation to defend or indemnify the restaurant company during breach litigation. Its argument to the court: that not only is a breach like this not covered in its general policy definitions, but that even if it were, the restaurant company hadn't met a $250,000 basement floor limit up to which the firm needed to self-insure for covered events.
 
 
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