Inside Housing News High Court rules landlord entitled to additional 6m indemnity from insurance broker after data breach

pYou are viewing 1 of your 1 free articlesppA housing associations broker has been found liable for breach of duty in a landmark High Court judgmentppWatford Community Housing WCH brought a professional negligence claim against Arthur J Gallagher Insurance Brokers for failing to make timely notifications of a data breach to one of three of its insurersppDeputy High Court Judge David Bailey found that Gallagher was liable to WCH for a breach of duty that deprived the claimant of up to 5m in potential indemnityppIn March 2020 one of the landlords employees accidentally sent an email that included personal data such as the sexual orientation and ethnicity of 3544 tenants and employees to 3167 recipientsppWCH had three insurance policies at the time including a cyber policy underwritten by Pen Underwriting on behalf of Lloyds for up to 1m a combined policy underwritten by QBE with a 5m limit and a professional indemnity PI policy underwritten by Hiscox of up to 5mppThe court found that Gallagher did not tell WCH to notify two of its insurers of the breach until the coverage periods had expired leaving the housing association without 5m of the cover it had paid for ppWCH claimed that Gallagher advised it to notify only its cyber insurers rather than the combined and PI policyholders ppJudge Baileys ruling stated that WCH was entitled to the full 11m indemnity Gallaghers legal team had argued it would only have been entitled to a cap of 5m cover regardless due to the terms of the policies which the judge dismissedppThe email data breach gave rise to 1136 complaints against WCH The housing association has so far settled or is attempting to settle 1050 valid claims against itppWCH expects it will end up paying more than the 6m it has already paid out over the breach The period for claims to be made lasts until 23 March 2026ppBut for the defendants breach of duty the claimant would have had the benefit of triple insurance against its losses from the data breach under a horizontal layer of primary insurance providing 1m of cover under the cyber policy 5m of cover under the combined policy and a further 5m of cover plus defence costs under the PI policy Judge Baileys ruling statedppThe claimant had paid premium for a total of 11m of coverage and in my view there is no legitimate basis on which its entitlement to an indemnity should or can be reduced to a total of 5mppHe concluded But for the defendants negligence the claimant would have been legally entitled to recover an indemnity under the three policies in respect of the whole of its loss caused by the data breach up to a combined limit of 11mppIn my judgment therefore the claimant is entitled to damages from the defendant in an amount equivalent to the losses that the insurers would have been legally liable to pay over and above the 6m that the claimant has already recoveredppBoth WCH and Gallagher declined to commentppNew to Inside Housing Click here to register and receive our weekly regulation and legal roundup straight to your inboxppAlready have an account Click here to manage your newslettersp