Cyber Insurer Sues Grocery Client, Says It Won't Pay Breach Claims

Grocery chain Schnucks, which suffered a major security breach earlier this year, has been sued by its cyber insurance provider over lawsuits resulting from the breach.

Schnucks disclosed in April that more than 2.4 million customer records were compromised in a malware attack on its systems.

Liberty Mutual, which provides the cyberbreach insurance coverage for Schnucks, sued Schnucks last week, saying that it should not be liable to pay the costs of eight lawsuits arising from the breach or for claims made by banks that work with Schnucks.

In court documents published by the website Main Justice (PDF), Liberty Mutual says that it is willing to pay Schucks' breach costs, it is not willing to pay costs resulting from lawsuits filed by customers against the grocery chain over the breach of privacy.

Liberty Mutual also says it will not pay costs related to claims by four banks and one payment processor resulting from the breach. Schucks' cyber insurance is provided as part of a multipurpose property damage policy that does not cover suits and claims resulting from a breach, the insurer says.

"For the purposes of this insurance, electronic data is not tangible property," Liberty Mutual states. "The claims described in the complaints and claims are not for physical injury to or loss of use of any tangible property, but rather for the loss of personal information. Such a loss is not for 'property damage.'"

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