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P.F. Chang's Lawsuit Could Affect Your Cyber Liability Coverage

10. November 2014 08:26

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According to Hartford Courant, an insurance industry journal, the Travelers Indemnity Co. of Connecticut is suing P.F. Chang's Chinese Bistro. The insurance company claims the restaurant's General Liability Insurance policy doesn't cover losses or legal expenses stemming from the restaurant's data breach. If Travelers wins the federal case, it could be a definitive blow for businesses that rely on policies other than Cyber Liability Insurance to cover cyber risks.

In other words, it's a lawsuit to watch, folks. Here's the skinny:

The moral of the story (other than P.F. Chang's is being sued left and right!) is that you must understand what your insurance policies do and don't cover. In this case, the federal class-action lawsuit against P.F. Chang's alleges the restaurant failed to take adequate steps to prevent a data breach and protect customer financial information — claims a Cyber Liability Insurance policy can address, but not standard General Liability Insurance.

Let's explore the differences between these two policies so you can spare your business a similar insurance fiasco.

Where Physical Loss Ends and Digital Loss Begins: General Liability vs. Cyber Liability Insurance

It's easy to see why P.F. Chang's may have drawn on its General Liability coverage to address the data breach. After all, GL is often (mistakenly) thought of as a catch-all liability policy. And it does offer some pretty formidable protection by covering third-party lawsuits over…

Perhaps P.F. Chang's was told that data is a form of property. Maybe the restaurant owners thought the lawsuits over compromised customer data would be addressed by GL's property damage liability coverage. However, GL only covers lawsuits over the loss of someone's physical property — e.g., a restaurant being sued over its kitchen fire that destroyed neighboring property.

Data is a separate beast entirely, and that's why it requires a separate policy to protect it.

Cyber Liability Insurance is designed to cover the specific nuances of data breaches. The policy comes in two forms:

Because data breaches are quickly becoming the norm, more companies are investing in Cyber Liability policies. You can learn more about it here: "Cyber Insurance: Why It Matters, Where You're Exposed."

Does Your Small Business Need Cyber Risk Protection?

You may want to consider investing in a Cyber Liability policy if your business…

To get free quotes on Cyber Liability Insurance today, complete a quick online application. Our insurance experts know the policies that keep your business protected from the financial doom-and-gloom of data breaches and will explain your coverage to you so there's no second-guessing.

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Cyber Risk Insurance | Data Breach | General Liability Insurance | Insurance News | Restaurants | Risk Management | Small Business Risk Management | Tips for All Small Businesses

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