Get Out Your Dictionaries to Get the Full Insurance Coverage You Bought

Over the past couple of years, many businesses have found themselves defending against class action lawsuits asserting claims under Illinois’ Biometric Information Privacy Act (“BIPA”). BIPA regulates the use and transmission of biometric information such as handprints. Many businesses use biometric information for employment purposes such as time-keeping or security, as well as for various consumer uses. A BIPA claim, at its core, complains of injury caused by a violation of a person’s right of privacy. The Comprehensive General Liability insurance policies purchased by businesses generally provide coverage for “advertising injury,” including for claims for violations of a person’s right of privacy.

Yet many insurers have aggressively resisted defending and indemnifying businesses sued for BIPA violations, arguing against coverage on the basis of undefined terms in their policies such as “publication,” and on ambiguous exclusions. But a May 20, 2021, decision by the Illinois Supreme Court in West Bend Mutual Insurance Company v. Krishna Schaumburg Tan, Inc. undermines the efforts by insurers to avoid providing a defense to businesses sued for BIPA claims. And generally, for businesses whose claims have been denied by their insurers, Krishna serves as a reminder of how the language of the insurance policies can be used against the insurers that drafted them.

The decision in Krishna turns in part on the meaning of “publication” as used in the insurance policy. The policy provides coverage for claims arising out of the oral or written publication of material that violates a person’s right of privacy. “Publication” is not defined in the insurance policy, and the insurer argued that a communication is not “published” if, as was the case in Krishna, it was disclosed to only a single party. Since “publication” is not defined in the insurance policy, the policyholder was left to guess at what the insurer meant by “publication” in its grant of coverage. Where the terms used in an insurance policy are susceptible to more than one meaning, they are considered ambiguous and are construed strictly against the insurer that drafted the insurance policy. And since the meaning of “publication,” an undefined term in the policy, was determinative of coverage, the Court looked to the dictionary, legal treatises, and other legal authorities in its quest to find the plain, ordinary, and popular meaning of “publication.” In this case, it found that “publication” includes both disclosure to a single party as well as to the public at large.

The insurer in Krishna also sought to avoid coverage based on an exclusion that cited two statutes (other than BIPA), as well as any statute, ordinance or regulation other than the two specified statutes, that prohibits or limits the sending, transmitting, communicating, or distribution of material or information. The clause extending the exclusion to “other statutes” unidentified by the insurer is potentially very broad, as there are many statutes that regulate the communication or distribution of material or information. To find the meaning, the Court held that “other than” the specified statutes must mean statutes of the same general kind of regulations as those identified by the insurer. To the extent that the insurer meant something else, the Court held that the “other than” language would be ambiguous.

The lesson for businesses in this case is that they should not accept the head-scratching language cited by the insurer in its letters denying coverage as an endpoint. Rather, it may be just the beginning of a path to winning your claim. The ambiguity around policy language can lead to a fight over the actual meaning of the language. Businesses can — and should — use that knotty language against insurers to hold them to the promises they made in the policies they sold.

This article originally appeared on LinkedIn on May 27, 2021