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Target Corp. filed suit against Chubb Ltd. in federal district court Friday, charging the insurer improperly refused to indemnify it for part of the costs it incurred in connection with its with its December 2013 data breach.
The retailer is seeking to recoup up to the $74 million in costs it spent.
Target contends in this lawsuit that because the banks had to replace plastic payment cards it constitutes “loss of use of tangible property that is not physically injured,”’ under its general liability coverage, according to the lawsuit filed in U.S. District Court in Minneapolis on Friday in Target Corp., a Minnesota corporation, v. ACE American Insurance Co. et. al.
Minneapolis-based Target was the target of a computer breach that exposed the payment card information for some 110 million customers in December 2013.
The ensuing litigation included lawsuits filed by financial institutions that alleged damages resulting from the cost of replacing payment cards that had been potentially compromised as a result of the breach, according to the lawsuit.
In May 2016, Target reached a settlement in a class action lawsuit brought on behalf of a class of issuing banks for about $58 million, according to the lawsuit.
Adding in confidential settlements with major card issuers as well as numerous individual issuing banks led to a total settlement of about $138 million, of which about $118 million was paid to the issuing banks, and the remaining $20 million paid in attorneys fees and class representative payments, according to the lawsuit.
Chubb unit ACE had issued two general lability policies to Target for the policy period Feb. 1, 2013, to Feb. 1, 2014, that provided a total general aggregate limit of $50 million.
It also provided a third layer excess general lability policy with a $25 million limit of liability, according to the lawsuit, with other excess layers provided by units of American International Group Inc. and Axa XL, a division of Axa SA, according to the lawsuit, which are not parties to the suit.
The lawsuit, which charges the insurer with breach of contract, seeks damages, attorneys fees and interest.
Target said in a statement it had been in discussions with the ACE for over a year before filing the lawsuit. We believe the costs are covered within the scope of the insurance policy Target has with ACE and are focused on resolving the outstanding claim,” it said.
Chubb said in a statement it does not comment on pending litigation matters.
A Chubb Ltd. unit has prevailed in a coverage dispute with an Arkansas school district based on the timing of the claim submitted under its claims-made, employment practices liability policies.