ITHIN THE LAST few years, the Internet has become an integral part of most companies’ business models. Whether the company’s business is founded on clicks or bricks, the Internet is used to advertise products and services; communicate with customers, clients, fellow employees; convey data; provide a forum for the exchange of ideas and currency; and the list goes on. Of course, with all of the benefits that this new technology provides, liabilities inevitably follow in the form of malfunctions, defamation, viruses, etc. Many companies and their counsel may believe that these liabilities are adequately covered by traditional insurance policies, such as comprehensive general liability, errors and omissions, and first party business interruption coverage.
The reality is that most traditional policies provide limited coverage that is becoming increasingly more difficult to access. For example, battle lines are being drawn over whether computer data constitutes tangible property that can be damaged. To further limit coverage possibilities under traditional policies, the insurance industry has developed broadly worded exclusions that are designed to “absolutely” preclude coverage for many technology-based claims. The exclusion trend is also motivated by the industry’s desire to sell new insurance products that are being marketed as specialized policies covering Internet/technology risk exposures. This article provides a brief overview of commonly available coverages under the new policies and concludes with a discussion of the key coverage pitfalls that exist within those policies.
