An online hacker attack on corporate websites has made headlines recently. It is easy to wonder how effective a typical general liability insurance policy protects online businesses. This question has a simple answer: “Not well.” You are unlikely to be fully protected if your cyber insurance does not cover the unique types of exposure that can occur when you do web-based work.
What are the Most Common Internet Liabilities
The majority of liabilities that came with having an internet business presence were previously tied to intellectual property law. Insurance companies will need to evaluate a wider array of potential liabilities, because e-commerce is becoming more complex.
Intellectual Property Right Violations
While traditional general liability policies offer protection against advertising injury, it is not sufficient to protect against intellectual property violations or slander. The way these liabilities are dealt with in internet law is quite different. Many business owners learned the hard truth that their current policy didn’t protect them against common liabilities on the internet.
For example, infringement online can range from honest mistakes like using the copyrighted name of another company in your website’s meta tags to accidentally placing trademarked graphics on one your pages. It is highly unlikely that a CGL (Commercial General Liability Insurance), policy would cover these types of claims.
Libel and Slander
CGL plans include advertising injury coverage, similar to IP infringement. Internet law defines the elements of defamation differently, so claims originating on the internet are usually not covered. This area of internet law is constantly changing and could sometimes be very different depending on your location.
One example: Internet defamation claims based on negative reviews of competitor products and services have been dismissed by U.S. court systems. But, in June 2011, a Taiwanese internet blogger was found to be liable for defamation after he wrote that the food at a nearby eatery was “too salty”.
When someone’s personal information is shared without their consent or stolen, this is the type of internet privacy violation that most often ends up in court. This type of activity can sometimes occur in an online setting. However, standard business liability coverage usually does not cover this area because it is difficult to define.
It is crucial to be familiar with local internet laws, especially when privacy concerns are concerned. As an example, online marketers who sent unsolicited emails to their customers have been sued by the state for not being aware of anti-spamming laws.
Transmitting Malware, Hacking, or Denial of Service Attacks
Intruders could cause your online business to crash within minutes. These unique online threats could have serious repercussions on your business’s ability to file claims for loss or damage. Unfortunately, most general liability policies don’t cover them.