Is liability arising out of a breach of confidentiality covered?

  • Often companies disclose information to each other subject to a confidentiality agreement.
  • A breach of confidentiality is an example of a pure economic loss, since the loss arose without injury or damage being done to tangible property.
  • A breach of confidentiality is not normally covered because the Pure Economic Loss extension excludes liability that arises entirely out of the Insured’s contractual undertakings.
  • However, if it can somehow be shown that the liability would have arisen anyway, even in the absence of the confidentiality agreement, then that liability could be covered under the Pure Economic Loss extension.
General Liability