General Liability policies cover lawsuits alleging bodily injury, property damage, personal injury, and advertising injury. The property damage coverage requires damage be to tangible property as opposed to intangible property.
Most data breaches include damage to intangible property stored on hard drives. As a result, General Liability carriers argue that there is no coverage for data breach. However, General Liability carriers are increasingly providing endorsements for Data Breach.
The purchase of stand-alone Cyber Risk policies are becoming increasingly common for businesses with data breach exposure. Of course, these policies cover a lot more than just data breach. Other coverages include Media Liability, Cyber Extortion, Denial of Service, and loss of business income.
Source: Business Insurance, April 2, 2012