Internet Liability Insurance

As a Web professional, you are moving up in the world. You are accessing new markets, selling to old, established industries and providing them with new technology. However, being on the cutting edge doesn't mean you're not exposed to age-old liabilities. In fact, it's quite the opposite. It's time to start protecting your companies and your unique liabilities. It's time for Insurance 2.0.

When all you could really do on the Web was access basic information and communicate with friends and colleagues, you couldn't get into too much trouble. But since then, we've seen the Web go from 1.0 to 2.0 and now 3.0. And as quickly as the Web and the applications progress, so do the risks involved.

There are plenty of people on the Internet with malicious intent. Everyone has heard stories of hackers gaining access to websites, obtaining private information, and holding companies hostage. Identity theft, cyber extortion, viruses and worms - these were all inconceivable just a few generations ago.

But it's not just hackers causing damage. The Internet has also created a new venue for companies and individuals to easily make careless but costly mistakes. Protecting yourself - from yourself - has always been a key component of liability insurance. It's an essential safeguard in a world where a simple point and click can expose a business to any number of dangers.

Internet liability insurance covers very specific wrongful acts as defined by the policy forms. Here are some examples of such coverages:

Infringement or unauthorized use of any advertising material, copyright, slogan, trademark, etc., through the Internet.
Failure to protect private or confidential information of others from unauthorized access on or through the Internet.
Making known to any person or organization material that violates a person's or organization's right to privacy or publicity right.
Plagiarism or unauthorized use of a literary or artistic format, character or performance through the Internet.
Failure to prevent the transmission of a computer virus to authorized users of a website or any private communication networks such as customers, suppliers or supporters, on or through the Internet.

Take a second to digest that last bullet point. As protection software advances and viruses become more sophisticated, there may be an instance when a company could get sued for not properly updating its virus protection - thus causing everyone who legitimately uses the site to download a computer virus. Can you ever be 100 percent sure that a hacker will not install a virus on your site?

Viruses are not even the biggest threat hackers pose to your client's network. Identity theft is big money. Data breaches hit mainstream news all the time, including recent breaches from the Veterans Administration and TJX. We know the banks deal with it every day - as famed bank robber Willie Sutton said, "...because that's where the money is." However, many of your websites also store personal information that can be used to access money outside of a traditional bank heist. Think about the multitude of smaller companies whose systems may be hacked and the potential profit for the perpetrators. It's the long-tail of theft.

So who needs Internet liability? Any company using the Internet could benefit from the intellectual property protections and virus security. But the real need is network security liability for those companies conducting transactions over the Internet.

When considering an Internet liability policy you should ask a few questions. First you need to know the policy's definition of "Territory." This is where your policy protects you. The Web is worldwide, and so should be your territory. Second, you should know the insurance company's rating; one standard rating institution is A.M. Best. Third, you need to make sure that you and your agent understand exactly what is covered and what is not. All companies write their Internet liability policies differently, and there is typically not a standard policy form. Ask for a copy of the policy before purchasing, and go over it with your agent.

As an Internet company, a good liability policy could be the most important protection you have. It's as essential as a condo's building coverage, a construction company's workers compensation policy or a doctor's malpractice insurance.

About the Author: Andrew L. Cohn is a the president of ALC Risk Solutions, a full service insurance firm in Miami, Florida. Andrew writes property and casualty insurance for a wide range of industries, and specializes in technology insurance and internet liability insurance risk management. Andrew was a speaker at the 2009 Internet Dating and Social Networking Conference. You can visit ALC Risk Solutions at www.alcrisk.com at you can visit their technology specialty site at www.internetriskspecialist.com. To contact Andrew Cohn call, 786-382-6833 or email acohn@alcrisk.com