Many insurance policies provide coverage for claims of “Personal and Advertising Injury.”  These cases often involve claims where the insured violated another’s right to privacy.

In OneBeacon America v. Urban Outfitters, OneBeacon sued for a declaration that it did not owe defense or indemnification to Urban Outfitters in three underlying cases in three different jurisdictions where customers sued for privacy violations.  In each of the underlying cases, Urban Outfitters used or disseminated to third-parties, customer zip codes.  OneBeacon relied on an exclusion that excluded coverage for “Recording and Distribution of Material in Violation of Law.”  In all three cases, the plaintiffs alleged that Urban Outfitters violated state statutes that addressed the collection of private information.  As such, the court in OneBeacon, found that the exclusion applied, and that OneBeacon was not obligated to defend or indemnify Urban Outfitters in the underlying cases.

Typically, the four corners of the complaint provide the basis for an insured to allege its entitlement to coverage.  In OneBeacon, the four corners of the complaint provided the insurer’s basis to deny coverage, since the entirety of the underlying complaints relied on violations of state statutes, for which coverage was specifically excluded under the policy.

Thanks to Coleen Hill for her contribution to this post.