In today’s media and technology age, website owners, designers, hosts and Internet Service providers are presented with
multiple risks with regard to business and cyberspace. E-commerce now comprises approximately one-third of all the
business conducted on the Internet according to the Insurance Journal. Further, in 1999, businesses lost more than $20
billion because of power outages and hackers. Therefore, protection for your Internet-based resources must be a top
Since Internet commerce and use of the Internet in business settings for employees is prevalent and continues to grow in
popularity, insurance coverage is now offered to protect companies from exposures. These policies are incredibly
important because traditional insurance does not cover losses via the World Wide Web. In fact, these new digital risk
policies are just as important as specific policies for cars and homes. For instance, if you are store owner and someone
breaks in and physically damages several of your computers, your property coverage will cover the damages. However, if
someone from a distant location manipulates your firewall protection and gains remote access to your server and then
deletes and alters your data, you are not covered under general liability or property damage insurance. They simply do not
cover this type of activity, though some may argue that data is considered a form of “property.”
There are also risks associated with employee usage of the Internet and e-mail while on company time or using company-
Many times employees will feel as if their privacy was violated if they come to find out that their employer read their e-
mails or looked through information in files they felt were personal. The court will generally first determine if the
employee had a reasonable expectation that the information was in deed private, and then whether the employer’s actions
were warranted or unnecessary. If the employer has a clause in their company handbook outlining Internet and e-mail
usage, and employees acknowledge receipt and understanding of that policy, then the employee does not have a case for
privacy infringement. However, if these handbook policies are not put into place, then the employer can be found
negligent for enacting the proper precautions for its employees.
Companies may also wish to purchase Internet usage software to monitor employee conduct and detect inappropriate e-
mails and Internet usage. By using these programs, the company is establishing a balance between the privacy rights of
employees and the employer’s need to protect themselves from liability.
Claims of discrimination and harassment generally come as part of a hostile work environment claim in which an
employee accuses another of conduct that is unwelcome.
There are several other exposures that companies should be aware of if they have dealings on the Internet or via e-mail.
Potential risks can dramatically affect one’s bottom line and devastate a business without precautions set into place. Here
are the potential economy exposures.
Here are some ways in which individuals or entities can violate others with regard to trademarked data property.
Companies are being sued for copyright infringement more than ever because of the web-based usage of material that is
registered. There are other risks that reside within the company such as an employee misappropriating a company’s trade
secrets through e-mail, Internet bulletin board, blog posting or simply deleting them all together from the company
Intellectual property disputes are also one of the risks of using the Internet to conduct business. Multiple companies may
go through battle regarding ownership of content and licensing. Furthermore, website owners are liable for the content
they place on their sites. These violations will continue to grow as it becomes easier to infringe on the property rights of
As websites gather information about visitors, whether it is credit card information or other important data, those who own
the site are at risk of liability if accidentally or through employee misconduct, security is breached. This can happen within
or even through a third party hacking into the company’s system. To combat these issues, site owners may wish to post a
vendor that runs a secure website. In addition, the site controller can place unauthorized access controls forbidding those
without strict security access to enter and infringe on any part of the site.
Businesses using computers to interact with clients may also experience breaches to their security systems and virus
attacks. One of the most notable viruses that devastated many companies was the “I LOVE YOU” virus that hit in May of
2000. This virus had dramatic impacts and caused many to lose a significant amount of revenue. In addition, if your site is
providing a service to another company and it malfunctions, you could cause that third party to lose business or not be
able to collect information that is crucial for their functions.
Companies with these types of posting capabilities allow individuals to talk with one another quickly via the Internet,
however there are liabilities involved with this function as well. Should one of your employees post defamatory
information about a client, another employee or the company, this could be devastating to your business.
Cyberliability insurance protection is a solid way to protect your electronic property from the aforementioned risks. The
policies covered under the guise of cyberliability include any company with a web presence or business that performs e-
commerce activities. The coverage include intangible economic losses such as those listed on the slide.
Internet Liability coverage covers the following infractions. Also includes computer virus transmission, unauthorized
access or use, loss of service and threats to damage or misuse another entity’s system, data or website.
Coverage includes the following items listed on the slide.
Explain to your client the different features offered from the various carriers available through your agency. Since these
coverages vary from carrier to carrier, this slide and its content should be modified to suit the products you sell.
This slide should also reflect the specific coverages you offer based on the carrier’s exclusions to the policies. Modify
based on the exclusions present within the coverages you are trying to sell to your clients, as exclusions vary by policy.
These specialty policies are designed to combat the exclusions that are present in a CGL policy.