Cyber Policies

Employment Practices Liability
Corporate Structure


Larry Harb:

If you get into doing online auctions, the courts in 2002 said that everything online is not physical. It’s virtual. Now, why does that become important? Your general liability policy, the trigger for paying the claim—it’s an if-then contract, so if this happens, then that—is, in a general liability policy, you have to have the trigger of physical loss. So, think about that. In a GL or property policy, physical loss means something physical has to happen. The tree falls on the building. A fire destroys the building—physical damage. In the world of the internet, nothing’s physical. It’s all virtual. If I hack into your computer and steal your database of personal, private information on all your customers, have you lost your customer base? Well, the answer is yes but not ‘cause you still have it. I just took a copy of it. I can cause you financial harm if I took the list of all your bidders, okay, but you still have it and I have a copy now. So, the courts determined in 2002 that things on the internet are not physical, they’re virtual. So, what did we do? We wrote a whole new set of insurance policies that cover virtual losses. And that’s where you pick up in cyber policy—we call it database coverage, is what we do, because I own, so it’s a great marketing piece for me. But it’s the same policy, we just tweaked it. It’s a marketing deal, okay? But so, a cyber policy covers you for your online auctions, okay? And it’s just a little tweak, but it covers you for everything in the virtual world opposed to the physical world. And nowadays, your general liability policies, when you read them, you’ll read that they exclude all electronic medium, all online exposures. Everything virtual is now covered under a cyber policy, not under a general liability policy.