Zurich insurance offers a comprehensive program that helps businesses manage the risk created by technology. It combines risk assessment and engineering with risk transfer to help a business avoid the losses that might result from their e-business activities.

The promotional material says that the policy does the following:

A.     Covers the insured's e-business activities. Such activities include: e-mail communication; customer access to information and services; private and public publishing of Website information; hosting of clients' Websites selling products and services; and collaboration with others.

B.     Helps the insured to face the risks of: unauthorized access to or theft of his/her data or e-business activities; computer viruses; attacks on the insured's systems; alleged unauthorized e-commerce transactions; and unintentional programming or processing errors.

C.     Assesses the insured's e-business exposures by providing: internationally known consultants; review and analysis; and risk engineering.

D.     Provides protection, including: loss of business income; coverage to rebuild reputation after an e-business incident; replacement cost coverage for loss of software or proprietary data; DIC coverage to fill in the gaps with other policies; interruption of service from third parties; electronic publishing liability.

2. CONTACT

Zurich Insurance Company Zurich Towers

1400 American Lane Schaumburg, IL  60196 (847) 605-6000 FAX: (847) 382-2150

3. UNDERWRITING GUIDELINES

Not provided.

4. AVAILABILITY OF COVERAGE

All states.

5. LIMITS AVAILABLE/DEDUCTIBLES

Information not made available.

6. INSURING AGREEMENT

The E-Risk Protection Policy has five insuring agreements: business income loss; development costs; public relations expenses; interruption of service liability; and electronic publishing liability. Each of these insuring agreements is also a defined term that promises to “pay, up to the applicable limit of liability” for losses caused by a “covered event.”

7. DEFINITIONS

The following terms are defined:

A.     Business income loss—the hourly amount as stated in the declarations. Business income loss also includes other expenses that the insured would not have incurred, if not for the “interruption of service” (defined later). The coverage is payable for up to twelve months after the interruption. The policy also covers “investigation expenses” the insured incurs to determine the reason for the “interruption of service.”

B.     Claim—a civil complaint for monetary damages; arbitration proceedings; or any written demand for damages.

C.     Covered electronic business systems—the data and software used by the insured. Such systems must be under the “direct control” of the insured.

D.     Damages—amounts the insured is obligated to pay, not including defense expenses. Other items not included as damages are:

     loans;

     consequential damages;

     punitive damages;

     administrative awards;

     taxes; and

     fines.

E.     Defense expenses—reasonable expenses incurred to defend or appeal a claim against the insured. The term includes the cost of attachment bonds. It does not include wages, salaries, or benefits of the insured's directors, officers, or employees.

F.     Development costs—the amount the insured actually spends to replace or restore his or her intellectual property. These costs may not exceed the value of the intellectual property. That “value” includes depreciation and amortization as indicated on the insured's most recent financial statements.

G.     E-business activity—facilitation—by the insured—of the transmission of electronic data. Such activities include:

     providing others with access to the Internet or to the insured's “covered electronic business systems”;

     providing public information to others via the Internet;

     providing a Website for use by others; and

     the creation of a shared private network.

H.     Electronic data.

I.     Electronic publishing—the release—for a fee—of information, images, audio, and text.

J.     Electronic publishing wrongful act—libel, slander, disparagement, intrusion, disclosure of private facts, and  infringement of copyright, trademark, etc. by the insured in connection with his or her electronic publishing activities.

K.     Intellectual property—trademarks, service marks, copyrights, trade secrets, know-how, designs, technical data, etc. of the insured.

L.     Interruption of service—the interruption of the insured's activities due to the failure of covered systems because of a loss event (covered peril).

M.     Investigation expenses—incurred by the insured to determine the reason for a service interruption.

N.     Loss—damages and defense expenses.

O.     Loss event—see “perils”, below.

P.     Negative publicity—published information about the insured in connection with a “loss event” that will cause a “deterioration in [the insured's] professional reputation.”

Q.     Policy period.

R.     Property damage.

S.     Public relations expenses—expenses to restore the insured's professional reputation. The insured must hire a “qualified public relations consultant” or incur the expense under the direction of such a consultant.

T.     Qualified public relations consultant—one on the insurer's approved panel.

8. WHO IS INSURED

In addition to the person or organization shown on the declarations, newly formed or acquired organizations (other than partnerships and joint ventures) are also insureds. Newly formed or acquired organizations must be reported to the insurer within thirty days.

9. WHAT IS INSURED

As mentioned, the policy provides five coverages:

A.     Business income loss. Loss of income resulting from “interruption of service” due to a “loss event.” The event must take place during the policy period. The policy also covers investigation expenses to determine the cause of the event.

B.     Development costs. These are costs the insured incurs to develop new intellectual property after a covered loss to intellectual property.

C.     Public relations expense. After a covered “loss event” the insured may incur negative publicity. This coverage is meant to help the insured counteract that negative publicity. This coverage does not include any other costs the insured may incur as a result of the negative publicity.

D.     Interruption of service liability. If the insured is sued by a client because the client's service – as provided by the insured – is interrupted.

E.     Electronic publishing liability. Pays loss, including defense costs, as a result of an “electronic publishing wrongful act.”

Later in the policy, a “notice” appears; emphasizing that coverages A, B, and C apply only to the insured.

10. EXCLUSIONS

The policy covers all claims for the above coverages except:

A.     Events prior to the policy period.

B.     Violations of ERISA or RICO.

C.     Contractual liability.

D.     Actions brought by any governmental or regulatory agency. The policy says such agencies include, but are not limited to:

     the Federal Deposit Insurance Corporation;

     the Office of the Comptroller of the Currency;

     the Federal Reserve Board; and

     the SEC.

E.     Any actions by a governmental agency to seize or destroy the insured's systems.

F.     War.

G.     Utility failure.

H.     Intentional or criminal acts committed by the insured or its directors, officers, or employees.

I.     Bodily injury or property damage.

J.     Pollution.

K.     Nuclear.

L.     Costs to upgrade, maintain, or improve the “covered electronic business systems.”

M.     Deactivation of security controls.

N.     Transfer of funds.

O.     Satellite interruption or failure.

P.     Patent infringement.

Q.     Breach of warranty.

R.     Extortion.

12. CONDITIONS

The following conditions appear in the policy:

A.     Difference in conditions/priority of attachment—the other insurance clause. This policy is primary over other policies not specific to “e-business activities” and excess to another “e-business” policy.

B.     Territory—the policy applies to covered events occurring anywhere in the world, but the coverage for “interruption of service” and “electronic publishing liability” apply only to claims that are brought in and under the laws of the United States .

C.     Extended reporting period—upon cancellation – by either party – the insured may purchase an extended reporting period of twelve months. The premium is 75 percent of the annual premium.

D.     Defense, settlement, and allocation—the insurer has the right and duty to defend any claim under the policy. The insured may not settle any claim without the consent of the insurer.

E.     Deductible—applies separately to each insuring agreement.

F.     Limits of liability —the aggregate limit applies to all insuring agreements.

G.     Duties regarding electronic business systems—the insured must notify the insurer of any changes in the systems and must maintain and secure the systems “in compliance with currently acceptable industry standards.”

H.     Duties in the event of a loss—the insured must:

     notify the insurer;

     mitigate the business income loss;

     submit to questioning under oath; and

     cooperate with the insurer.

I.     Representations.

J.     No action against the insurer.

K.     Effect of certain events—coverage under the policy ceases when: the insured acquires or is acquired by someone else; a receiver is appointed for the insured; the insured merges with another company so that the insured is not the surviving company.

L.     Consent to settlement—if the insured does not consent to a settlement under the two liability sections, the insurer's duty to defend ends.

M.     Subrogation.

N.     Insolvency—of the insured does not affect the insurer's obligations under the policy.

O.     Notice and authorizations—the named insured is authorized to act on behalf of all insureds under the policy.

P.     Cancellation—by the company requires a sixty-day notice.

Q.     Assignment and changes—are not allowed without the permission of the insurer.