In Camp's Grocery, Inc. v. State Farm Fire & Cas. Co., 2 No. 4:16-cv-0204-JEO, 2016 WL 6217161 (N.D. Ala. October 25, 2016), one Camp's sued its insurance carrier for cyber insurance coverage. Camp's claimed coverage principally under its policy's Inland Marine coverage forms, including a claimed coverage for cyber insurance allegedly offered by the carrier on two forms: an Inland Marine Computer Property form and an Inland Marine (Coverage) Conditions form.
Although seemingly not identified by the District Court, the policy at issue appears to be a standard CGL policy to which the two identified forms were added. In any case, the District Court agreed with the carrier that the coverage forms from which Camp's argued for liability insurance coverage are instead first-party forms, not coverage forms for liability insurance coverage. The District Court entered a summary judgment for the insurance company of no coverage for the alleged cyber breach in this case.
Camp's operates a grocery as a franchisee of Piggly Wiggly in Alabama.
The plaintiffs against Camp's in the underlying case were Credit Unions. They sued for alleged damages resulting from an alleged cyber breach. The Credit Unions alleged that Camp's is liable for damage on the basis that a data breach was caused by Camp's failure to provide adequate computer systems and employee training and/or to maintain adequate encryption and intrusion detection and prevention systems.
The Credit Unions alleged claims against Camp's under Alabama law for negligence, wantonness, misrepresentation, and breach of contract. The Credit Unions also alleged a claim under federal law for violation of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq.
Camp's, in turn, filed the case we are concerned with here. Camp's demanded a declaratory judgment of its insurance coverage. Specifically, Camp's prayed for a declaration that State Farm must defend and indemnify Camp's in the underlying action.
It got a declaration concerning its insurance coverage, but not the one it was looking for. Even with the two Inland Marine endorsements added to this apparent standard CGL insurance policy, there still is no CGL coverage for the alleged cyber breaches at issue in the eyes of the District Court in this case. The coverage forms in question are first-party coverage forms, the District Court held. As such, they do not and never can provide for a duty to defend or to indemnify like a liability insurance coverage.
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