Insurance company Hiscox has launched the first insurance scheme to specifically target SMEs with protection from the risks of ecommerce and the internet.
Cyberliability will cover significant risks such as hacking, fraud and website damage. But the protection extends to other pitfalls companies face, including defamation, intellectual property rights, misuse of information and breaches of privacy rights.
Robert Goldhawk, Cyberliability underwriter at Hiscox, said: "Many businesses using the internet for the first time are unaware of the additional risks they face. At the moment, the internet is largely unregulated, making many websites fair game for criminals."
He added that many SMEs were unaware of the pitfalls of trading in a global market. "There are virtual ambulance chasers trawling the web for technical legal infringements to initiate litigation, and this can be costly and stressful for businesses that are not prepared. Most companies have made no insurance provision for the different environment they are operating in."
One company cited as a victim of the technological changes in business culture was Norwich Union. It settled out of court for £450,000 with rival Western Provident Association over a libel claim.
The outbreak of the Melissa virus earlier this year was also a significant cause of litigation because of the damage caused by its transmission.
Goldhawk concluded that the law had not kept pace with technological advances.
MAIN INTERNET PITFALLS
1) Failure to review content of company website regularly: a common source of claims for misrepresentation due to information on products or services being out of date.
2) Lack of firewall protection to prevent hackers.
3) Lack of checks made by lawyers for local and global legal infringements.
4) Transmission of viruses via email to customers and outside companies.
5) Employees allowed to use the email to gossip: with no strict company guidelines on email, employers find themselves falling foul of libel law.
Stay on top of all the major news and views on gender diversity, which has become a major focal point for our industry in 2018
Distie adds £200m in organic sales to its UK top line in 2017
Lengthy saga set for conclusion, with investor group including Dell and Apple on course to complete $18bn deal