Insurance Coverage for Violations of the Privacy Right of Seclusion

By Timothy P. Law

The scope of insurance coverage for publication of material that violates a person’s right of privacy is a hotly debated issue nationwide. A decision earlier this week by the Court of Appeals of Wisconsin squarely addresses a key facet of this debate: coverage available for violations of the Telephone Consumer Protection Act (“TCPA”).

In Sawyer v. West Bend Mutual Insurance Co., decided on July 10, 2012, the Wisconsin Court of Appeals ruled that liability coverage for publication of material that violates a person’s right of privacy applies both to the privacy right of secrecy and to the privacy right of seclusion. 

Given that standard general liability insurance policies contain no explicit distinction between secrecy and seclusion, this would seem to be an obvious conclusion, but a minority of courts (most notably, the Court of Appeals for the Seventh Circuit) have inferred such a distinction in cases involving the TCPA. 

In finding coverage for a TCPA claim, the Wisconsin Court of Appeals followed the Illinois Supreme Court’s decision in Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 860 N.E.2d 307 (Ill. 2006). The court noted that the faxed advertisement transmitted printed material and communicated information to the public, so it was a publication. The material transmitted was an unsolicited fax advertisement, which violated the TCPA. That material violated the recipient’s right to be left alone, i.e., his right to seclusion. Therefore, there was the publication of material that violated a person’s right of privacy.

This is the majority rule nationwide. The supreme courts in Florida, Massachusetts, and Illinois have all adopted this interpretation, as have the federal Eighth Circuit, Tenth Circuit, and Eleventh Circuit courts of appeals.

The insurance industry has responded to the spate of TCPA and privacy claims by issuing exclusions for liability under particular privacy statutes, including the TCPA. Given the majority rule and the wide availability of form exclusions specifically addressing coverage for TCPA liabilities, an insurance company should provide coverage without dispute where standard-form coverage language is employed and no TCPA exclusion was issued.

The attorneys in Reed Smith's Insurance Recovery Group have extensive experience advising clients on issues relating to coverage for violations of the TCPA and other issues relating to coverage for violations of privacy.