Home > Features > Insuring Businesses in the Internet Age • Bookmark   • Newsletters   • Register Search Options

FEATURE

Insuring Businesses in the Internet Age

Insuring Businesses in the Internet Age

August 27, 2008
Text size: 
Get XBIZ News
XBIZ Research
Will virtual reality boost the paysite market?
Yes, it will soon
  39.66%
Yes, but in a few years
  36.87%
No
  23.46%
Out of 179 votes. Results based on votes submitted by members of XBIZ.net social network.

" a business may not be properly insured against virus damage and loss "

In a business world that is becoming more dependent upon the Internet each day, companies must be aware of the risk involved in e-commerce and communication: the possibility of damage and loss due to computer virus.

Especially for businesses that depend heavily upon the Internet or function primarily as IT service providers, computer viruses can destroy entire networks of PCs, hard drives and disk drives. The virus may not only affect the business itself but also its customers, making the business liable for any loss of the customer's data and/or equipment. Fortunately, a business can protect itself in case of damage and loss caused by computer virus, but it first must properly be informed of possible pitfalls in its current policy and what choices would provide a better defense in the Internet Age.

Under the usual first party or third party business insurance policy, a business may not be properly insured against virus damage and loss. In fact, in 2001, the Insurance Services Office, Inc. altered the standard form commercial general liability policy to specifically prohibit covering electronic data under "property damage." Therefore, most current business liability insurance policies have continued to follow the narrowly defined terms of "physical loss or damage" and "property damage" to exclude any loss of electronic data due to computer virus. Insurers usually do not imply and will even deny coverage of loss due to virus under property insurance policies. Unless the damaged components relate to the computer's hardware, the usual insurance policy will most likely not cover it, and even trying to prove just physical damage is difficult enough. The courts do not recognize that the loss of data through virus corruption and the loss of data by physical damage to the computer system produce the same harmful cost in the end.

A computer virus can cost a company several hundred thousand dollars in repairs, income loss, public relations mending, lost information and data stolen by unauthorized sources. Companies most at risk are those that provide computer-related services to customers or handle transactions online. Some preventative measures that can be taken to reduce the risk of virus include anti-virus software, firewalls, plus intrusion detection software and security policy implementation. A business should also properly insure this risk through self-insurance, a general business liability insurance policy with the addition of covering electronic data loss and/or a stand-alone e-business or cyber liability policy with the addition of an insurer's duty to defend.

Most importantly before taking any action, a business should assess what parts of the company depend heavily upon Internet usage, how often the Internet is used, the extent of its vitality to the company, what company information is stored electronically, and if the business is focused on providing computer services to customers. It then should understand what its current policy includes and excludes and contemplate if a stand-alone insurance policy would work best to cover the risks that accompany Internet usage. Businesses must realize that while significant advantages exist to e-commerce and communication and its continual expansion, this also means that the risk and cost of computer virus continues to grow as well and should be properly insured.


OPINIONS & VIEWS

Data Privacy Is Tightening Up in the E.U.

Have you begun preparing for GDPR? If you are like most, you haven’t even heard of GDPR, but also if you are like most, it is going to affect your business, starting May 25, 2018. The GDPR, or General... More »

Could Adult Content Be Banned?

Earlier this month, I met with the Free Speech Coalition’s board of directors for our annual review. Despite the headwinds our industry faces, politically and economically, we are, as an organization,... More »

Cutting Costs in the Spirit of Entrepreneurship

Adult website owners are comprised of two groups: One is comfortable giving up 30-50 percent of their site’s gross sales revenue (aka profit) in exchange for software, hosting and services despite... More »
XBIZ NEWSLETTERS
Stay informed of the latest industry developments. Get XBIZ newsletters delivered to your inbox. Subscribe today!
Enter email address:

* To manage existing subscriptions click here.






POPULAR PRODUCTS & SERVICES
Submit your press release to
multiple news outlets with 1 click.
Subscribe to RSS news feeds or
add free content to your website.
Access XBIZ news and articles
with your mobile device.
Subscribe to XBIZ World magazine, the industry's leading e-commerce trade publication, delivering in-depth coverage of the online, mobile and ancillary digital markets.

UPCOMING EVENTS

XBIZ Retreat

May 30 - Jun 03
Miami, Florida

XBIZ Miami 2017

May 30 - Jun 02
Miami, Florida

XShow 18+ 2017

Jun 01 - Jun 03
Moscow, Russia

Cam Summit

Jun 02 - Jun 04
Lloret de Mar, Spain
Everyday thousands of business professionals browse XBIZ's industry directory for quality products and services. Not listed yet? Your company could be losing potential new business. Submit your company today!
Use XBIZ RSS feeds to stay informed of the latest industry developments or as a content syndication tool for your website!