(Alpha and beta testing are two stages of testing software before the software maker releases it for general sale. Alpha testing, the first stage, is usually internal within the vendor's systems. Beta, the next stage, often involves a selected customer or customers who try the system out to see if it works and to weed out any obvious bugs.)

Mr. Croydon said that Safeonlines customers include software developers, Internet technology professionals and network security people.

“What we're looking for are people who design, manage and implement products correctly so they can get the benefit of better insurance.” The changes, he said, will also attract “the right kind of customer.”

Customers that don't take these measures aren't excluded from coverage. “They just pay slightly higher rates,” he said.

Mr. Croydon added that the company, which was started in 1998, is also finding that large customers want coverage for some of their key employees. “If there is an error or if something goes wrong, the employee is covered,” he noted. Like “an architect if the building falls down, we have the systems architect. So if the system falls down, it's got to be their fault. It wasn't designed right.”

He said limits for SafeEnterprise are up to $5 million. Larger accounts can be taken to the London market for limits of $25 million or more, he explained.

Exclusions, he said, include Internet software providers, Web hosting companies and domain name registration companies. “Apart from that we have a wide range, about 70 or so, different classifications. So we can handle quite a lot,” Mr. Croydon said. He noted that nearly 90 percent of the company's clients are in the United States and Canada, mostly on the east and west coasts in the United States.

The policy offers comprehensive coverages against:

Technology E&O and negligent acts.
Defamation, invasion of privacy, libel and slander, plagiarism and infringement of intellectual property rights.
Inadvertent transmission of a virus or other malicious code.
Failure of security measures to prevent denial of service, unauthorized access or theft of electronic data.

Reproduced from National Underwriter Edition, July 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.