A Canadian on-line dating site, PlentyofFish, wanted to purchase the bankrupt site True.com but the Texas Attorney General filed a petition to block the marriage on the ground that the transfer of the private personal information of millions of people who had used True.com would potentially violate the Texas Deceptive Trade Practices Act. Which made us think: Is a corporation’s violation of its customers’ personal privacy covered by insurance?

A liability insurance company has the right to take over the defense of a policyholder and to control all settlement discussions.  What happens if the carrier fails to pursue settlement negotiations with sufficient zeal, knowing full well that it was leaving the insured exposed to liability above policy limits?  You may be at risk in California if your insurer does this to you.