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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | SEPTEMBER 14, 2000 SMART ANSWERS Safety Nets for Web Designers From liability for site malfunctions to intellectual-property suits, developers face risks that make insurance a necessity
Q: What insurance do I require as a Web designer? -- Greg M. Bell, Palo Alto, Calif. A: All businesses need property and general premises and operations insurance. Property insurance covers damage to physical property and the ensuing loss of income. General-liability insurance covers bodily injury and property damage owed to others due to negligence and/or legal responsibility, including workers' compensation insurance. Along with this basic coverage, experts say that as a Web-site designer, you must be covered for unique risks, including professional-liability and intellectual-property issues. What if an e-commerce site that you maintain failed to function after you provided an updated patch that contained a programming error? If the site were down for 48 hours and it normally generated transactions of $20,000 per day, you could be responsible for $40,000 in lost revenue to your client. If one of your clients' sites had a security breach and customers' credit-card data was stolen, you could similarly be held responsible. Under the intellectual-property scenario, you could come across an attractive image, icon, or site layout and consciously or subconsciously use a similar design for one of your clients. Both you and the client could then be named in a "trade-dress" suit for infringement of a copyright, trademark, or possibly even a patent. "It has been my experience that many Web designers are working out of their homes and have no idea of the intellectual-property risks associated with a quick copy-and-paste of someone's graphic image," says Rick Hagemeier of Bolton & Co., an insurance brokerage in Pasadena, Calif. "If these designers are ever brought into litigation on an issue like this, defense costs can quickly exceed $100,000, especially if either the client or the injured party is a notable firm or individual," he says. MORE INFO. Hagemeier suggests buying general liability insurance with advertising-injury coverage in case you get dragged into a lawsuit arising from an ad running on a site you have designed. You will also need an errors-and-omissions policy that includes copyright, trademark, and trade-dress coverage, Hagemeier says. Minimum costs for $1 million coverage will run you $2,500 a year, with a $5,000 deductible for a basic-office package. The cost can soar to $10,000 a year with a $10,000 deductible if you add the intellectual-property and patent-infringement coverage, he says. For more information, check out Marsh Inc.'s Web site (www.netsecuresite.com), which is devoted to insurance risks for new-technology companies. Bolton & Co. (www.insurepoint.com) has pioneered e-risk issues for small to midsize companies. Check out additional industry resources at www.insurancetech.com, www.propertyandcasualty.com, and www.aon.com to insure your company's future.  By Karen E. Klein  | | |
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