The Increase Demand from On-line Providers for Insurance

Insurers report a recent upsurge in demand by on-line publishers for insurance coverage. Five factors are largely responsible for this development:

(1) the recent introduction of Windows 95 and Microsoft's new on-line service, which is fostering many new commercial content providers;

(2) the steady expansion of content offerings on the established on-line services, such as CompuServe, Prodigy, America On-Line, and Delphi;

(3) the large number of daily newspapers that are now experimenting with on-line services;

(4) the publicity concerning the Stratton Oakmont decision, which has heightened awareness of the risk of defamation claims; and

(5) the tremendous interest in the World Wide Web, which, overnight, has transformed tens of thousands of individuals and businesses into electronic publishers.

One recent convert to the value of libel insurance is an Internet newsletter-writer, who was the defendant in Suarez Corp. Industries, Civil Action No. 267513 (Ct. of Common Pleas, Cuyahoga Cty. Ohio). Suarez Corp. sued the defendant for defamation based upon statements published in his electronic newsletter characterizing one of plaintiff's sales pitches on the Internet as a "scam" and the company's president "a slick direct-mail baron." The newsletter writer was not insured. The case was settled before the court issued any substantive opinion when the writer agreed to notify plaintiff at least 48 hours before publishing any new stories about the plaintiff. After the settlement, the writer told the Houston Chronicle:

I just recently found out that, for a mere $225 per year, I can get a rider on my policy that covers me in any libel suit, for up to $2 million . . . . Now, that only covers legal fees, not any judgments that might come down the road if I ever lost a suit (I won't). But I wish I'd had that when Suarez sued me the first time! The next person that sues me is staring into the teeth of a $ 2 million war chest!

LINKS:

Return to Controlling Risks - Insurance for Cyber-Publishers

Novel Risks for Insurers and Insureds

Two Different Types of Insurance Coverage

Insurance Coverage for Particularized Content

Premium Structures

Indemnification