Internet liability insurance

[konan]

Hello everyone, I'm curious if anyone has any strategic tips on obtaining the type(s) of insurance necessary to operate an e-commerce site. Lots of info on main street but I can't help but feel that there's got to be more innovative ways to deal with the "issues" at hand. Tia, konan.

[Dantplayer]

What kind of issues are you referring to? I've had my Lego store online since I was 16 and never ran into any troubles:
http://www.bricklink.com/store.asp?p=Dan

[konan]

Hey Dantplayer, thanks for the comeback. Having secured quotes from my local independant insurance agent I find the rates to be quite a bit higher than brick and mortar. Add product liability and it's stiff. The issues I am alluding to are the ones cited as needing protection from by my agent, virus transmissions, copyright infringement, customer data security, etc.
What type of insurance(s) do you have and what source did you secure them through? Appreciate your input!

[TimW]

You shouldn't need product liability insurance unless you are the actual manufacturer of said item. You might need general liability insurance, depending on your situation, but if you're just a retailer, I can't see the need for product liability insurance.

I am not a lawyer, etc., so take it for what it's worth.

[CRFBusiness]

Its important to look at your risk to determine whether you need to buy insurance and if so, what type. You would either buy General Liability (Public Liability in Europe) to protect you from liability of bodily injury or property damage or professional liability (Errors and Omissions, Malpractice, etc) to protect you from liability for financial loss. Many General Liability policies allow you to add in product liability protection as well.

As far as being liable if you don't manufacturer it? You bet you are. If your product causes death or burns someones house down, they don't come to you asking whether you made the product, you are sued, and that is what the insurance is there for. The insurance company has a duty to defend you in a lawsuit. In your contract with a contract manufacturer you could have them indemnify you for claims from their products, just make sure you are included or named as an additional insured, and get a certificate of insurance. This would allow you to present the lawsuit to their insurance company if you are served.

Do you need this coverage? Can't say unless I knew what your product was. Electronic equipment? I would say maybe. Fitness equipment, definitely. Books and CD's, probably not GL. Hard to say whether you need it or not. A general liability policy for a single person shouldn't cost you more then 1000 bucks a year. You can also just get a personal umbrella policy to cover you as well.

Also, don't go to the company that provides your home owners or auto insurance. Go to a broker that can deal directly with Property/Casualty companies. That would be insurance companies like AIG (Yes their P?C business is still strong), ACE, Chubb, etc. Wells Fargo has its own commercial broker, ABD as well as most large banks. Look in the yellow pages and they will list a ton.

Banks and tech companies second largest insurance expense tends to be professional liability. This protects the company, not from a claim of bodily injury or property damage, but pure financial loss. Claims could include, copywrite and trademark infringement, certain IP infringement as well as first party privacy, i.e. a release of personally identifiable information. Nice thing about our businesses, is we outsource that risk to companies like PayPal, that provide the privacy protection.

What protection is included in your "internet liability" insurance? What insurance company? Do you see a name like Cybertech, Digitech, etc?

Disclosure: I was a corporate risk manager for both a large tech company and pc manufacturer so did exactly this for a living. I am not a lawyer and this information is fairly general. Your circumstances will obviously be different. Resources out there include Rims.org and IRMI.com to start. Also, one advantage of a bankrupt remote entity is, you can just close up shop in the event of a big judgment. If you have questions, PM me.

[dvdwlsh]

Unless you already have a sustainable, profitable, proven muse, you are burning precious time and energy worrying about something that simply does not matter right now.

What exactly are you insuring against?

[Sven]

Well I think "innovative" and "insurance" will never apear in the same sentence. Insurers are amongst the most traditional of businesses, just like banks. They do not innovate.

I can not insure myself against product liability. They do not understand boats and they even understand less about self steering. I got one mention for a figure: eu 35,000.-- per year.

Needless to say I'm trying to find a way around product liability, I'll post it shortly.