Case Guides Insurers on Crafting Policies for Biometric Privacy Coverage

Hanover Insurance Group Inc.’s recent loss in a face scan privacy dispute provides a roadmap for insurers on how to craft clearer policy language to avoid having to provide coverage for a policyholder’s biometric privacy violations.

The US Court of Appeals for the Seventh Circuit became the first appellate court to pinpoint insurance policy language that’s too vague to exclude coverage for a policyholder that allegedly violated an influential Illinois law on biometric privacy.

Carriers will likely use the ruling as a guide in writing their standard business liability policies to explicitly carve out data privacy offenses, industry attorneys said. The ruling will also bolster policyholders seeking insurance protection amid an uptick in lawsuits claiming businesses used people’s face and retina scans and fingerprints without their consent, they said.

‘Basically we’ve set a precedent that there is coverage under the general liability policies,’ said Daniel Healy, a partner at Brown Rudnick LLP who works with businesses seeking coverage.