Knowing Your Internet Liability Insurance Needs

TechInsurance provides Business Liability, E&O, Excess Liability and Workers’ Compensation insurance coverage for Technology & Internet businesses.

Internet Liability Insurance

Internet liability insurance offers forms of coverage designed to protect businesses from liabilities that may arise in the course of conducting business on the Internet. Such liabilities may include copyright infringement, defamation and the violation of privacy.

The industry has not yet settled on a set of standards by which to govern Internet liability insurance. Given this lack of industry wide standards, two institutions have developed consensus-based Internet security benchmarks. Together, the American Institute of Certified Public Accountants, or AICPA and the Canadian Institute of Chartered Accountants, or CICA, have established consensus-based cyber security benchmarks based on a common framework to address the Internet's risks and opportunities. These benchmarks are called WebTrust and SysTrust.

WebTrust is for business-to-consumer assurance, and SysTrust is for business-to-business assurance. WebTrust helps online vendors optimize their electronic goals by documenting a business commitment to meeting their needs; providing online shoppers with a safe, inviting, efficient, and valuable e-commerce environment; and keeping sales promises. Such demonstrations of trustworthiness improve customer acquisition and increase sales conversion ratios. SysTrust is a professional service that builds customer confidence by addressing security, availability, confidentiality and processing integrity.

The joint venture of AICPA and CICA provides business-to-customer assurance in three areas. The CPA/CA Web trust entails three entities: one devoted to business practices and disclosure, a second to transaction integrity, and a third to information protection and privacy.

Of course, a premium is the price for a given insurance policy. The Insurance Information Institute forecasts that premiums for Internet liability insurance should exceed $2 billion within the next four to five years.