Umbrella Insurer Obligations under BIPA: Thermoflex Waukegan LLC v. Mitsui Sumitomo Insurance USA Inc.

May 17, 2024

Umbrella insurance policies provide excess liability above the limits of one’s typical insurance policy. Umbrella insurers cover any incidents that are not specifically excluded, such as some professional or business activities or any liabilities you agree to assume.

On May 17, 2024, in Thermoflex Waukegan LLC v. Mitsui Sumitomo Insurance USA Inc., the 7th Circuit decided whether certain violations of the Illinois Biometric Information Privacy Act (“BIPA”) were excluded from three different insurance policies issued by Mitsui Sumitomo Insurance.

Thermoflex required hourly employees to clock in and out with their handprints. BIPA ensures that individuals are in control of their own biometric data, such as fingerprints, retina scans, DNA, etc., and prohibits private companies from collecting it unless they obtain written informed consent by the individuals.  The employees allege that Thermoflex violated BIPA because they collected and processed the employees’ handprint data without their written consent.  Thermoflex sought protection from Mitsui under three of their insurance policies, but Mitsui declined to defend—or indemnify them, which is not a current issue. The three insurance policies included a basic policy, an excess policy, and an umbrella policy.

The court determined that the basic policy was not applicable to this litigation and an exclusion in the excess policy relieved Mitsui of any defense obligations, and in such turning the bulk of the focus to the umbrella policy. The umbrella policy contains three applicable exclusions, none of which relate to nonpublic—or confidential—information, thus exposing Mitsui to defense obligations. However, the duty to defend does not trigger until Thermoflex has exhausted all underlying insurance.

For more information regarding umbrella insurance obligations or obligations under BIPA, contact the qualified attorneys at Rock, Fusco & Connelly, LLC.