In an interesting case in Los Angeles, a court held that a cyber liability policy that covered “errors, omissions or negligence” did not cover a claim for a temporary loss of customer information deliberately withheld by a data company.
The insured, Global Fitness, purchased LA Fitness and then needed the members’ credit card and bank account information to bill the clients. The data company that processed members’ accounts withheld portions of the data until Global Fitness had satisfied several “vague demands for significant compensation”. Global Fitness claimed from its insurers the losses allegedly arising from the delay in receiving the information. Travelers Property Casualty Company refused to pay the claim.
The court agreed that the claim did not rely on negligence but on information knowingly withheld, and denied cover.
It must be correct that in the context the phrase “errors, omissions or negligence” is not without limits.
[Travelers Property Casualty Company of America v Federal Recovery Services]
