Insurer Must Defend FCRA Suits Despite Penalty Exclusion

Law360, New York (July 29, 2015, 4:45 PM EDT) -- Navigators Insurance Co. has to defend and indemnify Sterling Infosystems Inc. in two federal lawsuits seeking damages under the Fair Credit Reporting Act even though its errors and omissions insurance policy excludes fines and penalties, the New York Supreme Court ruled Tuesday.

The court said statutory damages for willful violations have to be considered compensatory damages rather than penalties because holding otherwise wouldn't jibe with the fact that the law separately provides for punitive damages.

"Interpreting the FCRA statutory damages as punitive forces the court to reconcile the illogical result in which punitive damages may be added to the punitive statutory...

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