Rene L. Siemens and David L. Beck of Pillsbury Law write:
It is often said that liability insurance does not provide coverage for fines and penalties imposed on an insured. Part of the difficulty is determining what constitutes a fine or penalty. Many courts have recently rejected insurance company arguments that “statutory damages” are uninsurable penalties. These courts have found that statutory damages can be remedial in nature and therefore may be covered by insurance.
These decisions are especially important in today’s world of online marketing and commerce, where statutory damages liability for privacy violations arising from unsolicited email, text messages and data security breaches is a growing risk for many businesses.
Read more on Pillsbury Law (pdf).