Blog Image
Profile Image Verifile
October 6 2015

Insurer Required to Defend and Indemnify FCRA Action Despite Penalty Exclusions

The New York Supreme Court has issued an opinion finding that an insurer has a duty to defend and indemnify a national background screening company in two FCRA actions despite the policy 's exclusions of fines and penalties. The plaintiffs sought statutory damages and alleged that a national background screening company willfully violated the FCRA. The central issue was whether the background screening company 's errors and omissions insurance policy required its insurer to defend and indemnify it. In its cross motion for summary judgment, the background screening company argued that under the policy, the insurer was required to defend and indemnify because the underlying claims constituted compensatory damages covered by the policy. This decision provides guidance on the interplay of insurance policies and claims under the FCRA.