Sony Insurer, Zurich, Files Suit to Deny Data Breach Coverage

Article

One of Sony Corp’s insurers has asked a court to declare that it does not have to pay to defend the media and electronics conglomerate from mounting legal claims related to a massive data breach earlier this year.

Zurich American Insurance Co. asked a New York state court, in documents filed in late July, to rule it does not have to defend or indemnify Sony against any claims “asserted in the class-action lawsuits, miscellaneous claims, or potential future actions instituted by any state attorney general.”

Zurich American, a unit of Zurich Financial Services, also sued units of Mitsui Sumitomo Insurance, AIG and ACE Ltd, asking the court to clarify their responsibilities under various insurance policies they had written for Sony.

“Zurich doesn’t think there’s coverage, but to the extent there may be a duty to defend it wants to make sure all of the insurers with a potential duty to defend are contributing,” said Richard Bortnick, an attorney at Cozen O’Connor and publisher of the digital law blog CyberInquirer.

Bortnick, who is not involved in the case, said Zurich is likely to argue that the sort of general liability insurance it wrote for Sony was never intended to cover digital attacks.

Sony could not immediately be reached for comment. AIG declined to comment, and Mitsui Sumitomo could not immediately be reached.

In April, hackers accessed personal data for more than 100 million users of Sony’s online video games. Sony said it could not rule out that some 12.3 million credit card numbers had been obtained during the hacking. In May, Sony said it was looking to its insurers to help pay for its massive data breach.

Zurich American, in court papers, said 55 purported class-action complaints have been filed in the United States against Sony. The insurer also said Sony has been subject to investigations by state and federal regulators since the breach.

Zurich American has received claims for coverage from Sony under a commercial general liability policy written for Sony Computer Entertainment of America. The insurer said it does not have any obligation to defend any other Sony unit under that policy, since it only applies to the specific business in question.

Zurich American said its policy only covers the Sony unit for “bodily injury, property damage or personal and advertising injury.” It said no such claims have been made in any of the class-action lawsuits.

The case is Zurich American Insurance Co and Zurich Insurance Co Ltd vs. Sony Corp of America et. al., Supreme Court of the State of New York, No. 651982/2011.