Zurich American Insurance Company v. Fieldstone Mortgage Co., Court Holds Insurer Must Provide Coverage for Privacy-Related FCRA Claims

Kelley Drye Client Advisory

Following a recent court decision by the United States District Court for the District of Maryland, companies sued for allegedly violating the Fair Credit Reporting Act (“FCRA”) may be able to offset their defense costs and any resulting liability through insurance. This case held that the insurer had a duty to defend its policyholder against the FCRA claims at issue, because the alleged FCRA violations fell within the scope of the personal and advertising injury coverage” in the policyholder’s commercial general liability (“CGL”) policies.

This holding is significant as although it involved a financial services company, any company that handles consumer personal information faces liability risk under FCRA. This case confirms that it is critical for policyholders to evaluate the risks prior to purchasing insurance, and to ensure that the purchased insurance covers these business risks.

Kelley Drye’s Insurance Recovery Practice Group has prepared a client advisory describing the background of the case and its implications for policyholders.