David Bochenek was the lead plaintiff in a class action suit against McAdoo Cosmetic Surgery. The complaint was that McAdoo had violated the Telephone Consumer Protection Act (TCPA) and the Consumer Fraud Act (CFA) by sending David and other members of the class unauthorized text solicitations. McAdoo filed a claim with Doctors Direct Insurance that carried its professional coverage. A cyber claims endorsement was attached to the policy.

Doctors Direct denied the claim because the suit did not allege any of the types of cyber claims covered by the endorsement. Bochenek argued that the wording was ambiguous.

Click here to see if coverage was awarded.

Any bodily injury, property damage, or personal and advertising injury loss that is related to the TCPA and similar laws is specifically excluded on the ISO Commercial General Liability Coverage Form. In 2014 ISO issued mandatory endorsements that go much further and exclude all bodily injury, property damage, and personal and advertising injury losses due to access or disclosure of confidential or personal information and data-related liability.

Click here to review a PF&M description of the CG 00 01-Commercial General Liability exclusion.

Click here to read brief descriptions of the new CGL mandatory endorsements.

Cyber liability is a complex topic because it cannot be reduced to a single loss exposure. Cyber liability can cause financial loss when credit card information is stolen, but it also can result in humiliation and loss of reputation when confidential information is stolen and released. The value of the loss can be no more than an annoyance value based on the time needed to contact credit card issuers and banks or it can involve a multimillion dollar breach of security and loss of customers.

Click here to review two recent articles from the Rough Notes Magazine on the subject.

Many insurance carriers have developed and are developing policies and coverage forms to meet the cyber liability needs that are not covered by standard coverage forms. Coverage and availability varies by carrier as does pricing and it is important that the coverage provided matches the needs of the customer.

Click here to review the Cyberspace class in The Insurance Marketplace for the state of Indiana that lists brokers who are active in cyber liability and can provide excellent advice.