In light of the recent news reports about web cyber-terrorists targeting corporation internet sites, it’s perfectly natural to wonder how well the standard general liability insurance policy protects online businesses. Needless to say, the response to this question is “not well”. The fact is, unless your insurance policy specifically includes a fairly-new type of coverage known as cyber insurance, you are probably totally unprotected from the unique types of exposure that occur while doing business online.
What are the Most Commonly Seen Internet Liabilities?
Historically, most of the perils associated with an online business site were tied to intellectual property law. Unfortunately, as internet commerce gets increasingly innovative, new internet legislation is enacted, and a larger number of businesses use the world wide web as their main channel of communication, a broader assortment of new liabilities must be considered by insurance companies.
Intellectual Property Right Violation
The advertising injury protection contained in traditional general liability insurance plans does safeguard against intellectual property violation, libel, and slander claims, but the way these liabilities are treated is somewhat different under internet law. As a consequence, many business owners have learned the difficult way that their company’s existing policy did not contain the forms of typical liabilities found on the internet.
As an example, infringement on the web may range from a genuine mistake such as using another company’s trademarked name in the website’s meta-tags, to inadvertently putting a trademarked image on one of your pages. It is highly improbable that a normal CGL (Commercial General Liability Insurance) plan would cover against these kinds of claims.
Libel and Slander
Similar to IP infringement, common CGL plans do contain advertising injury coverage against slander and libel. Unfortunately, internet law once again deals with these elements of defamation so that lawsuits coming from the internet are usually not covered. Additionally, this part of internet law is changing fast and can be drastically different based on where you live.
Just to illustrate, internet slander claims founded on company sites that feature unfavorable reviews of a competitor’s product have typically been thrown out by U.S. courts, but an internet blog writer in Taiwan was found liable for defamation in June 2011 after writing that the food was “too salty” at a nearby eatery.
Privacy Matters
The kind of internet privacy invasion that most-typically ends up in the courtroom happens when someone’s personal information is either distributed without their permission, or outright stolen. Because of the legally unclear situations where this type of activity often transpires in an internet setting, however, this poorly-understood area of internet law is usually omitted from basic business liability insurance policies.
Knowing local internet laws is vital where privacy matters are concerned too. For instance, some online marketers have found themselves engaged in lawsuits after sending out unsolicited e-mails simply because they didn’t know that their state had enacted an anti-spamming law.
Transmission of Viruses, Hacking, and Denial of Service Intrusions
Attacks by hackers on your business internet site, or accidentally sending out malevolent computer viruses to clients and associates can bring your web business to a halt in mere minutes. While these specific electronic threats carry very real repercussions for loss and damage claims against or by your company, they’re almost never covered in any sort of detailed fashion by normal general liability plans.
Adding to Your CGL with Cyber Liability Insurance
Despite the fact that cyber liability is a new kind of insurance, a lot of insurers do offer it as a supplement to your company’s general liability insurance policy. This internet-specialized form of coverage is written to clearly protect your business from the kinds of online incidents mentioned in this article, and insure any expenses stemming from losses, damages, and attorney’s fees. Whether your business has a major online presence, or a small one, the truth of the Information Age is that you have to safeguard it with some kind of cyber liability insurance.
Darin Mendanor has spent over 20 years in the insurance industry as a specialist in general liability insurance. Look for upcoming articles where he will discuss other important issues related to commercial general liability insurance.