There are two general categories of insurance policies: first-party policies and third-party/liability policies. First-party polices provide benefits directly to policyholders for losses suffered by the policyholders. For example, fire damage to the policyholder's plant or financial loss resulting from the interruption of the policyholder's business would be covered under the first-party insurance. Generally, these first-party losses are covered under policies such as "all risk," "named peril," "business interruption," or "expense to reduce loss" coverages. Among these various types of first-party policies, "all risk" insurance policies provide the broadest coverages.
Third-party or liability policies provide protection for claims against the policyholder by third parties that have suffered a loss and seek to hold the policyholder liable for that loss. Some third-party claims include securities and non-disclosure claims, product liability and shareholder claims for management. While several different types of these policies exist, most corporations hold what is known as a "comprehensive general liability" policy. Such a policy provides coverage for liability imposed upon the insured as a result of unintentional and unexpected personal injury or property damage. More specialized policies include coverage policies for Directors and Officers (D&O), Errors and Omissions (E&O), and Fiduciary Claims.
Despite their differences, the critical question for both first-party and third-party policies is whether there is property damage. Of course, property damages arising out of service interruptions for e-commerce businesses may not be as apparent as when a fire destroys a store. Thus, it may be more difficult for the insured to gain compensation for these "virtual" losses under the traditional insurance policies.
Why Traditional Insurance Policies are not Enough: The Nature of Potential E-Commerce Losses & Liabilities,
3 Vanderbilt Journal of Entertainment and Technology Law
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