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Sony Insurer Sues Over Data Breach Defense Payouts

Sony Insurer Sues Over Data Breach Defense Payouts

July 21, 2011 | By Kyle Orland

A major insurer is claiming in newly filed court papers that it is not responsible to pay costs related to defending multiple lawsuits surrounding the breaches of Sony's PlayStation and Qriocity servers earlier this year.

In the court documents, filed Wednesday in New York state Supreme Court and reported by Reuters, insurance firm Zurich American argues it is "not obligated to defend or indemnify any of the Sony defendants for the claims asserted in the class-action lawsuits, miscellaneous claims, or potential future actions instituted by any state attorney general."

Sony Computer Entertainment America filed a claim for such coverage on April 1, under a commercial general liability policy held with Zurich. But the insurer claims that policy does not cover other Sony units, such as the newly created Sony Network Entertainment America, affected by the breach.

Moreover, Zurich says its policy with Sony covers only "bodily injury, property damage or personal and advertising injury," none of which are claimed in the suits against Sony.

The case could be a costly one for Sony if Zurich's claims are borne out in court. Sony is facing 55 different class-action complaints over the data breach that exposed personal information from millions of PlayStation user accounts, as well as inquiries from attorneys general in states such as New York.

Sony already estimates costs associated with the breaches -- including efforts to beef up digital security -- will lead to ¥14 billion ($171.7 million) in losses for the current fiscal year.

Zurich also filed suit against two other insurance companies, seeking assurances that they would share in any payout should Sony's claim be validated.

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