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No duty to defend Sony in PlayStation hacking suits: Zurich units

Posted On: Jul. 21, 2011 12:00 AM CST

NEW YORK—Zurich American Insurance Co. has sued a Sony Corp. unit alleging that it is not obligated to cover the media and electronics company for lawsuits and investigations related to hacking of its PlayStation Network.

Zurich American and Zurich Insurance Co. Ltd. filed the lawsuit Wednesday against New York-based Sony Corp. of America in New York State Supreme Court in Manhattan, which states they are not obligated to “defend and potentially indemnify” Sony from class action lawsuits, miscellaneous claims and possible investigations by state attorneys general related to April hacking attacks on its network.

The insurers are subsidiaries of Switzerland-based Zurich Financial Services Ltd.

CGL, excess policies

According to court documents, Zurich said it is not obligated to defend or indemnify Sony because Sony’s primary commercial general liability policy and its excess policy with Zurich do not qualify for such coverage.

Further, Zurich alleges in its suit that primary coverage for the data breach lies with Sony’s other insurers, who are listed as defendants in the lawsuit. They include Mitsui Sumitomo Insurance Co. of America; National Union Fire Insurance Co. of Pittsburgh, Pa.; ACE American Insurance Co.; among others.

Sony’s PlayStation Network in North America and Qriocity online services in Japan were hacked in April, exposing more than 100 million customer accounts that included identity and financial data. The breach has led to numerous claims against the company.

It reportedly was the second-largest online data breach in U.S. history, with losses estimated as high as $2 billion.