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New York Appellate Division Applies Retroactive Date Exclusion and Unfair Trade Practices Exclusion to Deny Coverage under a Comprehensive Cyber Policy

Blogs, Cyber Risks, Liabilities, Insurance and Litigation

In LifeLock, Inc. v. Certain Underwriters at Lloyd’s, 2017 WL 161045 (N.Y. App. Div. Jan. 17, 2017), the First Department affirmed the dismissal of claims seeking coverage under an Information Security, Privacy Liability, First-Party Data Protection, and Network Business Interruption Insurance Policy. LifeLock is an identity theft protection company. It was sued in several class actions asserting that, through statements on its website, it had engaged in fraudulent and deceptive practices to induce customers to enter into contracts that did not provide the promised protections. The Retroactive Date Exclusion precluded coverage for “related or continuing acts … where the first such act … was committed or occurred prior to the Retroactive Date.” The statements first appeared on LifeLock’s website in 2005 and remained after the Retroactive Date of January 8, 2008. Underwriters argued that there was a pattern of false and misleading advertising beginning in 2005, so the Exclusion applied. The court agreed. In addition, Underwriters argued that the claims fell within the Exclusion of unfair trade practices. Again, the court agreed.