Details, details: insurance for winery e-commerce

by James Hilbrant

You wouldn’t think of selling wine at your winery without adequate liability insurance. But what about selling your wine via the Internet? Are you aware of the full range of new liabilities that the Internet presents–and are you covered?

Almost without us noticing, wine businesses have become data management operations. We collect production data, manage inventories, plan our budgets and manage our finances using computers and in the process create vast seas of data. We use the internet to communicate with customers and suppliers via web sites, newsletters, email, and social media.

Did you ever stop to think what would happen if a malicious computer virus took hold and wiped out all your data? What would it cost you to recover?

What if a hacker broke into your system and stole your wine club member’s credit card information? What if you make a mistake on your website and post information that is incorrect, misleading or—at least in someone’s eyes—discriminatory? Could you mitigate the problems and absorb the financial losses?

Not worried yet? Consider the Fair and Accurate Credit Transactions Act or FACTA, a set of federal regulations intended to protect consumers from identity theft. The Act contains a provision that requires any entity with a “covered account” to have a written plan to detect breaches of consumer data. Depending on how much business you do on line and the damage to customers whose data gets stolen, not having a compliant written plan can turn a big problem into a major disaster.

Or lets say you’re a winery in Minnesota and suffer a data breach. Did you know that Minnesota’s Plastic Card Security Act requires breached companies to reimburse card issuing financial institutions for the costs associated with providing “damaged” cardholders with the notification of the breach, cancellation and re-issuance of cards, closing and reopening accounts, stop payments refunds for unauthorized transactions charged to their accounts.

Luckily, there is insurance. General Liability, Property and Crime policies are the traditional protection. Unfortunately, such policies were not designed to provide coverage for the full range of data related liabilities. In response, Cyber Liability and Internet/Network Risk insurance policies have been developed. Coverage can include:

  • First Party Coverage that protects
    • information assets,
    • business interruption,
    • cyber extoration,
    • expenses related to crisis management
    • identity theft.
  • Third party coverages such as:
    • professional services including errors, omissions,
    • content and media liability
    • network security, and privacy.
  • Plans and deductibles are normally custom tailored to meet the insured’s exposures.   Limits are available from $100,000. per claim to more then $5.0MM per claim and deductibles as low as $500. per claim.  Policy premiums are very affordable and in certain policy forms included as standard coverage features. 

    If you haven’t spoken to your insurance representative about the new threats involved with e-commerce and the networked computing environment, you should. And if he or she doesn’t seem to know much about cyber liability or think it’s a very big deal, keep looking until you find a representative who does.

    James Hilbrant is an insurance professional at Winery Care specializing in the wine business.

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