O’Hagan Meyer Secures Policy Rescission in Biometric Privacy Coverage Dispute

O’Hagan Meyer partner Katherine Jones secured summary judgment on behalf of an insurer in an insurance coverage dispute before the U.S. District Court for the Northern District of Illinois. The Court permitted the insurer to rescind an employment-related practices liability insurance policy based on material misrepresentations in the insureds’ application for coverage.

The dispute arose after the insured companies sought coverage for an underlying biometric privacy matter involving their collection of employee fingerprint data. When applying for insurance, the companies denied knowing of any fact, circumstance, or situation that could result in an employment-related claim. However, earlier communications showed that the companies had been advised of the growing risk of biometric privacy litigation and understood that their practices could create potential legal exposure.

O’Hagan Meyer argued that these prior communications demonstrated that the insureds’ application response was materially inaccurate. Although the insureds maintained that they were unaware of any formal claims when they applied for coverage, the Court found that the application asked more broadly about circumstances that could potentially result in a claim. The Court also concluded that the insurer’s underwriters were entitled to rely on the accuracy of the information provided in the application.

The Court granted the insurer’s summary judgment motion on its rescission claim and denied the insureds’ competing motion. The decision delivered a significant result for the insurer and underscores the importance of complete and accurate disclosures concerning known risks during the insurance application process.