Q: We run a mostly online business. Do we need insurance that protects online assets as well as offline?
Jason Fisher, co-owner, BestLifePlans, www.bestlifeplans.com
A: This is a tricky topic because it could involve intangible assets such as digital files (think of the Target bull's-eye logo), or intellectual property, (such as patented technology for online commerce), copyright and trademark theft or misuse, or business interruption resulting in an online loss of financial assets. It also could relate to network assets to transmit and receive data.
Intangible assets are not presently insurable because of the difficulty in valuing them. There is no way to settle a loss claim if values cannot be agreed upon, although this may be possible in the future (see www.cloudcover.net).
Intellectual property is insurable, but coverage is pricey, as is IP liability, which protects an insured party who unwittingly infringes on others' intellectual property. Such cases can result in costly litigation, often a motive for purchasing this insurance
Copyright and trademark coverage is available under most standard commercial general liability policies. This coverage applies if infringing acts are unintentional. Intentional acts are not covered.
Cyber liability, errors and omissions and technology coverages may apply when an insured is hacked, used as a hacking conduit, is a transaction agent with personally identifiable information, or is the holder of protected data like medical records. Business interruption and expense losses can be large. Some policies cover both errors and omissions and cyber risks, however I am told that they are most cost-effective for larger organizations that can retain a primary layer of the risk.
Finally, the nature of your business suggests you may have a more general errors and omissions issue that could warrant further analysis and discussion.
I advise you to seek the advice of a qualified, credentialed, independent insurance agent/broker for more specific recommendations.
About the author
Peter C. Young is the 3M endowed chair in international business at the University of St. Thomas, Opus College of Business. If you have a question for the Outside Consultant column, tweet it to @USTbusiness.
