Court Decision Highlights Overlapping Coverage
An English court clarified how multiple insurance policies, not just cyber insurance, can apply to a single data breach incident, offering lessons for companies and brokers about data breach liability. As outlined in a recent A&O Shearman blog, the case revolved around a housing association’s misdirected email in 2020 that exposed personal data from 3,500 people. Roughly 1,000 individuals made complaints. Settlements are expected to exceed £6 million.
Three Policies, One Incident
The housing group had three relevant insurance policies:
- A Cyber Policy with a £1 million cap
- A Combined Policy with a £5 million cap
- A Professional Indemnity (PI) Policy with a £5 million cap
They notified the cyber insurer right away but failed to notify the other two policies until it was too late.
Missed Notification Leads to Lost Insurance Access
The insurers for the Combined and PI Policies initially denied coverage due to late notification. The Combined insurer later reversed course. The PI insurer did not.
The client sued its broker, claiming poor advice led to lost coverage. The broker argued that total coverage was always capped at £5 million due to “other insurance” clauses. These clauses outline how overlapping insurance responds to the same incident.
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Court Says ‘Other Insurance’ Clauses Cancel Each Other Out
The court disagreed. It ruled the clauses canceled each other out, which meant the claimant could have received up to £11 million if all notifications were timely.
Broader Implications for Cyber and PI Insurance
“Different types of insurance can cover data breach liabilities,” the blog notes, showing cyber coverage is only part of the puzzle.
Timely Notification Matters
Key takeaway: Notify all relevant insurers immediately; waiting could cost millions.
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