Insurer Denies Coverage for U. of Utah’s $3.3M Data Breach

ENGLEWOOD, Colo.—Colorado Casualty Insurance Co. has filed a federal lawsuit maintaining that it is not responsible for compensating the University of Utah for $3.3 million in costs related to a 2008 data breach.

The June 2008 breach occurred when burglars stole back-up tapes containing sensitive information for 1.7 million patients at the university’s hospital and clinics from a Perpetual Storage Inc. employee’s vehicle, according to The tapes were on their way to the data storage company’s storage facility.

Though the disks were recovered untouched a few days later, the university spent more than $3.3 million in breach notification costs, credit monitoring fees, phone bank costs and other expenses.

However, in a nine-page complaint, the insurer, which provided breach insurance for the university at the time of the incident, contends that it is not required to cover the costs sought by the university. Colorado Casualty, which is seeking a declaratory judgment from the court, did not provide a full explanation as to why it believes it is not obligated to pay the breach related costs.

For its part, Perpetual Storage has filed a motion to dismiss the complaint.

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