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Court of Appeal Rules on Scope of Insurance Coverage for Cyber Matters

Timothy J. Hill, Brian Chung and Codie Mitchell

This is an update to our May 15, 2020 bulletin summarizing Justice Pollak’s decision in Laridae v. Co-operators, 2020 ONSC 2198. In that decision, she ruled that the insurer, Co-operators, had a duty to defend Family and Children’s Services of Lanark, Leeds and Grenville (“FCS”) and Laridae Communications Inc. against two claims. Co-operators argued that it had no duty to defend based on data exclusion clauses under the respective insurance policies, which excluded claims arising from the distribution or display of data by means of an internet website.

This decision was reversed in 2021 ONCA 159 by Justice Thorburn writing for a unanimous Ontario Court of Appeal. The Court interpreted the data exclusion clauses broadly. Justice Thorburn determined that the clauses were “clear and unambiguous,” covering all claims asserted in the proceedings, and that denial of coverage based on the clauses would not nullify other coverage provided under the policy.

This ruling significantly narrows the scope of an insurer’s duty to defend in claims involving a data breach.

The Aird & Berlis team included Timothy Hill, Brian Chung and Codie Mitchell.

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