BIPA Exclusions Gaining Traction: What Policyholders Need to Know

Key Takeaways

• Courts increasingly enforce BIPA exclusion clauses in liability policies
• Insurers argue biometric data claims fall outside standard coverage
• Recent rulings favor insurers in over 30% of cases
• Policyholders must review contracts for explicit BIPA carve‑outs
• Failure to secure exclusions can expose firms to multi‑million penalties

Pulse Analysis

The Illinois Biometric Information Privacy Act, enacted in 2008, has become a litmus test for data‑privacy risk management. Companies that collect fingerprints, facial scans, or voiceprints now face potential damages of $1,000 per negligent violation and $5,000 per reckless violation, propelling insurers to reassess traditional liability policies. While many firms assumed their commercial general liability (CGL) policies would cover such claims, recent court decisions highlight a growing disconnect between policy language and the unique nature of biometric data exposures.

In the past year, at least a dozen appellate rulings have examined whether BIPA claims fall within the scope of CGL coverage. Judges are increasingly interpreting exclusion clauses—often buried in the fine print—as sufficient to bar coverage for biometric violations. Insurers argue that BIPA claims constitute statutory violations distinct from bodily injury or property damage, and several courts have upheld that view, granting insurers a win in roughly 30% of the recent cases. This trend is prompting insurers to draft more explicit BIPA exclusions and to offer standalone biometric liability endorsements for an additional premium.

For policyholders, the practical takeaway is clear: conduct a thorough audit of existing insurance contracts, flag any ambiguous language, and negotiate explicit carve‑outs or dedicated biometric coverage. Companies should also implement robust biometric data governance—such as consent management and secure storage—to reduce the likelihood of a BIPA suit. Proactive risk mitigation not only curtails potential penalties but also strengthens bargaining power with insurers in an increasingly litigious environment.