This instant connectivity has not been lost on business. As quickly as consumers are buying personal computers and accessing the Internet through modems or cable boxes, businesses are building and implementing web sites on the Internet, sensing the great potential in sales, advertising, and customer service. For some businesses, using the Internet is not just an extension οf their normal business, it is a matter οf survival. Without a web site, many businesses would not able to compete within their marketplace.
However, in the frenzy to secure a "presence" on the Net, many businesses have not properly evaluated the risks they face when expanding activities to the Internet. Some businesses simply have not considered whether this new sales and advertising "tool" creates new exposures for them. Others have regarded their activity on the Internet to be merely an extension οf their normal functions, creating no new risks for them. Unfortunately, this mindset could lead to major uncovered losses for businesses.
Somewhat in the same manner, insurance professionals have not thoroughly examined the exposures created by doing business on the Internet. There has been little review οf existing policies to determine if they provide adequate coverage for Internet sales or advertising, and not much has been done to identify any "new" or "unique" risks that have originated with e-commerce.
This truly is the information age, and one οf the easiest sources οf information to access is the Internet. Everyone seems to be headed for the Internet in one way or another. It has become a primary vehicle for communication, replacing the telephone, regular mail service, as the way to communicate effectively in business and personal life.
Business has flocked to the Internet for several reasons. Some 'f these are the same reasons that have driven the general public to the Internet--ease 'f communication and the ability to get information and conduct research quickly and efficiently from the comfort 'f one's office or home. But business also recognizes the huge potential the Internet provides for advertising, sales, and cost reduction--driving more dollars to the bottom line.
The objective 'f this article is to evaluate the risks businesses face by using the Internet in sales, advertising, and other online activities. These risks will then be analyzed in view 'f several standard commercial insurance policies: ISO's Building and Personal Property Coverage Form (CP 00 10 06 95(*)), the Business Income (and Extra Expense) Coverage Form (CP 00 30 06 95*), and the Commercial General Liability Policy (CG 00 01 01 96(*)). The analysis will review the perceived exposures 'f a business with a web site to determine whether these standard coverage forms protect the business from anticipated losses. The analysis will identify exposures that do not appear to be covered under these forms. In particular, the analysis will attempt to identify risks unique to the Internet. This article will