Critical Computer Assets May Be Exposed to Risk by Gaps in Business Insurance Coverage

Are computer and web-based data systems important to your business? For almost all companies today the answer clearly is yes. But what is less clear, however, is how to manage computer systems  and Internet risk effectively and to insure against potentially catastrophic exposures.

The expanding scope of technology has raised many insurance coverage issues as courts, insurers and policyholders contend with the unique risks posed by computer data and the Internet. It is  increasingly doubtful that these risks can be adequately insured under the typical business insurance policy, in light of recent conflicting court decisions regarding insurance coverage for information  systems and data and the proposed exclusion of electronic data and software from the standard Comprehensive General Liability (“CGL”) form. In consequence, insurance carriers are developing new products to supplement traditional coverage and cover these exposures.

To manage computer-related risk effectively, it is important to be aware of recent legal developments and the policy changes that carriers are planning for 2002.