Sony Insurer Files Lawsuit To Dodge PSN Outage

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News Posted: Sat, Jul 23 2011 6:28 PM
The PlayStation Network outage and customer data thefts from earlier this year cost Sony an enormous amount of lost revenue and have spawned a veritable fleet of lawsuits. At least one of the company's insurance providers has panicked and is asking for a court ruling that would confirm it has no responsibility to cover any of Sony's expenses. The company, Zurich American Insurance Company (ZAIC), filed the request on Wednesday.

ZAIC claims:
[T]he claims set forth in the Class Action Complaints filed against SCEA and the other Sony Defendants, as well as the miscellaneous claims, arising out of the cyber attacks on the PSN and SOE Network and the unauthorized access to and theft of the named plaintiffs and putative class members' personal identification and financial information, do not assert claims for "bodily injury," "property damage" or "personal and advertising injury" so as to entitle SCEA to defense and/or indemnity under the ZAIC Primary Policy."

"Even if claims for "bodily injury," "property damage," and/or "personal and advertising injury" were alleged, which is expressly denied, the ZAIC Primary Policy includes certain exclusions that apply to exclude coverage for the claims asserted in the Class Action Complaints... Therefore ZAIC has no duty to defend or indemnify SCEA because the Class Action Complaints and miscellaneous claims do not allege injury or damages covered under Coverage A - Bodily Injury or Property Damage Liability or Coverage B - Personal and Advertising Injury Liability of the ZAIC Primary Policy."

They weren't damaged. They just didn't work. Because they were damaged. And who actually runs software on these things anyway?

ZAIC is seeking summary judgment in its own favor and has further asked the court to rope in all of Sony's other insurers. This last is a bit amusing--ZAIC wants the court to decide if they also owe anything to Sony, in order to insure it doesn't end up paying the full cost of coverage itself. It also argues that only SCEA actually contracted it for insurance coverage and that it's therefore only liable to pay for damages assessed to the SCEA--if, of course, it was liable to pay anything at all (and it isn't).

The larger issue underneath the company's frantic attempts to extricate itself from financial liability is the question of how hacking damage should be addressed. No one can reasonably argue that the hacks in question didn't cause Sony a great deal of money. The servers housing the PSN may have remained physically undamaged, but the network itself was fundamentally compromised and shut down. Allowing ZAIC to claim that it bears no responsibility because the data and function of the servers was never insured in the first place would set a huge precedent. It might well send IT departments scurrying for phones and contracts all over the US.
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3vi1 replied on Sat, Jul 23 2011 10:30 PM

"Oh, we'll insure you... until such point as you actually need to use our insurance Then, we're out without paying a dime!"

Welcome to to the lawyer hell you've been perpetrating on your customers, Sony.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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realneil replied on Sat, Jul 23 2011 11:02 PM

3vi1:
"Oh, we'll insure you... until such point as you actually need to use our insurance Then, we're out"

Sony doesn't deserve to be compensated by insurance as I see it, but insurance companies are a pet peeve of mine. They're always happy to start taking your money, but seldom will they give it back without making you jump through their hoops and ring their bells. It doesn't matter what kind of insurance either. They are true crooks, operating as legitimate businesses, and screwing people left and right, all of the time.

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rapid1 replied on Mon, Jul 25 2011 12:33 AM

Insurance is kind of like politicians they will all rip you a new one and want you to see them as friends and necessary until you need them for anything. If I have been paying car insurance for 10 years without having an accident, but have one I will still have to pay my deductible. That in itself is a straight rip off.

Either way as far as all this SONY mess goes I said shortly after it started that I thought they would at least loose a leg because of it. They are also having stiff competition all around now, whereas I remember when buying a SONY in several component choices specifically TV was considered a great choice. Heck I still have a 36" Sony TV that works well. Of course I also have a 17" Samsung CDT in the basement that works well too. There PC's are like Apple and are just designer upcharge devices. I don't know is they loose the PlayStation market or any large percentage there saturation and valuation just keeps getting lower, and lower as far as I see it.

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