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  1. #1

    Question Insurance for real hosting providers?

    Hey all,

    We recently needed to get some high-limit liability coverage for a colo expansion and we got this gem back from our broker:

    We don’t have a market that will allow pornographic sites, social media or blogging hosted sites, please advise if you have any clients with these types of websties
    Erm, yeah, we told you that on the original application and you issued the policy anyway. Now you have a problem with it? Yes, they do, they're dropping us and a fairly unconvincing "um, sorry" is the best they can do.

    This is what it said on our original application:

    Hosts, owns or runs a websites that allow users (the public) to post content without review and approval.
    Hosts, owns, or runs a website that contains pornographic materials.
    We never tried to hide anything, we answered the questions and they had the answers. Now we're being told those are disqualifiers. (So basically they issued the coverage without any human ever reading our application.)

    This is for commercial general liability and property coverage. I don't see how it matters if the hard drives in the server rack we accidentally push over onto some poor sod in the next aisle have some customer's customer's dirty pictures on them. Maybe naughty bits are heavier than the regular kind? But OK, I can see that some companies might not want to handle adult content.

    But refusing to issue coverage because a host hosts blogs? How does any host have any insurance then? I spoke to the owner about this and asked him pointblank "How do you advertise that you offer insurance to hosting companies if you can't write coverage for anyone who hosts other people's content without approving it first?" He had no answer for that.

    So does anyone know a broker/insurer that works with real hosting companies that host real content belonging to real customers (and doesn't just pretend to)? A referral would be really helpful.

    Thanks for any advice!

    Also, check your own coverage and ask your broker pointblank. If you don't pre-approve all of your customer's content, you may find out that you don't have the insurance you thought you did.
    Last edited by jdw; 05-18-2012 at 06:40 PM.

  2. #2
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    We recently acquired a new policy from Farmers that was rather reasonably priced and would take care of the liability coverage requirements you're mentioning.

    Worth checking in to, imo.
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  3. #3
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    We use TechInsurance as our broker, and I believe a number of other WHT users do too. They should be able to set you up with a good policy:

    http://www.techinsurance.com/
    Scott Burns, President
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  4. #4
    Techinsurance are the exact people who burned us on this. If you're a host and you have coverage through them, you better call and ask if you're really covered, or just pretend.

  5. #5
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    Quote Originally Posted by jdw View Post
    Techinsurance are the exact people who burned us on this. If you're a host and you have coverage through them, you better call and ask if you're really covered, or just pretend.
    TechInsurance is just a broker. Your underwriter may have specific policies/issues with adult content (I.E. Is your underwriter Hiscox, CNA, Travelers or etc...?)

  6. #6
    When a broker says "we don't have any market" it means that none of the insurance carriers (underwriters) they work with will do it. The particular policy Techinsurance issued us a COI for was through The Hartford.

    To reiterate what I think is the scary part of this: Techinsurance asked specifically about this stuff on their app, we answered those questions honestly, our answers were reflected on the printed application to The Hartford, and they took it and issued us COIs for the policy. If I hadn't happened to ask a question about it after the fact, we'd still think we were covered right up til we someday had a claim get denied. But I asked one person one quick question about it in email after the fact, and all of a sudden they couldn't backtrack fast enough.

    Ironically I only asked about the adult sites because they are so few and so small that I wanted to make sure the other 97% of our business wasn't unfairly subsidizing their portion of the liability policy. We are not an adult company ourselves, nor is it a target market for us. But certainly blogs and social media sites are a high percentage of our business, and we don't review/approve our customers' content before it goes online, which seems to be where the real problem is.

    In my opinion based on this experience, Techinsurance grossly misrepresents their ability to obtain liability insurance for hosting companies. (Seriously, how many hosting companies preapprove all customer content and have "no blogs!" in their TOS?) And I'm very curious how many other companies answered "yes" to one or both of those questions and got coverage anyway. (At least until IT hits the fan.)
    Last edited by jdw; 05-19-2012 at 02:26 PM.

  7. #7
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    In the Netherlands we've found insurance at Hiscox (http://www.hiscox.com/). They are the only company in the Netherlands covering general liability for IT/hosting companies as far as I know. Perhaps Hiscox is available in your country as well? The pricing is fair in my opinion (about 0,3% of turnover).

  8. #8
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    We use techinsurance...

  9. #9
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    Quote Originally Posted by jdw View Post
    Ironically I only asked about the adult sites because they are so few and so small that I wanted to make sure the other 97% of our business wasn't unfairly subsidizing their portion of the liability policy. We are not an adult company ourselves, nor is it a target market for us. But certainly blogs and social media sites are a high percentage of our business, and we don't review/approve our customers' content before it goes online, which seems to be where the real problem is.
    Scary stuff. I'm not affected personally, but definitely reason for other hosts using them to check their policies.

  10. #10
    Quote Originally Posted by jdw View Post

    Ironically I only asked about the adult sites because they are so few and so small that I wanted to make sure the other 97% of our business wasn't unfairly subsidizing their portion of the liability policy. We are not an adult company ourselves, nor is it a target market for us. But certainly blogs and social media sites are a high percentage of our business, and we don't review/approve our customers' content before it goes online, which seems to be where the real problem is.
    this is exactly why insurance providers and underwriters who handle this industry, charge a bit of a premium. Its just part of the risk assessment and calculation when determining rates.

    Quote Originally Posted by jdw View Post
    Hey all,

    We recently needed to get some high-limit liability coverage for a colo expansion and we got this gem back from our broker:



    Erm, yeah, we told you that on the original application and you issued the policy anyway. Now you have a problem with it? Yes, they do, they're dropping us and a fairly unconvincing "um, sorry" is the best they can do.

    This is what it said on our original application:



    We never tried to hide anything, we answered the questions and they had the answers. Now we're being told those are disqualifiers. (So basically they issued the coverage without any human ever reading our application.)

    This is for commercial general liability and property coverage. I don't see how it matters if the hard drives in the server rack we accidentally push over onto some poor sod in the next aisle have some customer's customer's dirty pictures on them. Maybe naughty bits are heavier than the regular kind? But OK, I can see that some companies might not want to handle adult content.

    But refusing to issue coverage because a host hosts blogs? How does any host have any insurance then? I spoke to the owner about this and asked him pointblank "How do you advertise that you offer insurance to hosting companies if you can't write coverage for anyone who hosts other people's content without approving it first?" He had no answer for that.

    So does anyone know a broker/insurer that works with real hosting companies that host real content belonging to real customers (and doesn't just pretend to)? A referral would be really helpful.

    Thanks for any advice!

    Also, check your own coverage and ask your broker pointblank. If you don't pre-approve all of your customer's content, you may find out that you don't have the insurance you thought you did.
    find a new provider - this one obviously doesnt understand your business and their policy likely wouldnt be worth anything if you ever needed them anyway, as they would find all sorts of loop holes to deny you the coverage payout you thought you were paying for. Go with a company/underwrite that knows exactly what they are getting into. there will be a premium, but, its worth it..
    www.cartika.com
    www.clusterlogics.com - You simply cannot run a hosting company without this software. Backups, Disaster Recovery, Big Data, Virtualization. 20 years of building software that solves your problems

  11. #11
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    Quote Originally Posted by cartika-andrew View Post
    this is exactly why insurance providers and underwriters who handle this industry, charge a bit of a premium. Its just part of the risk assessment and calculation when determining rates.



    find a new provider - this one obviously doesnt understand your business and their policy likely wouldnt be worth anything if you ever needed them anyway, as they would find all sorts of loop holes to deny you the coverage payout you thought you were paying for. Go with a company/underwrite that knows exactly what they are getting into. there will be a premium, but, its worth it..
    I fully agree with you. One point I would like to make though is make sure you get everything in writing. I know insurance policies tend to state your answers to any questions in writing but make sure they do state them just in-case you ever need to claim. If they mis-sold the policy and you have it in writing, they are still liable to pay out even if they did make a mistake in what they offered.

  12. #12
    Hi Wullie - great points all around
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  13. #13
    Quote Originally Posted by cartika-andrew View Post
    find a new provider
    I would love to. I have contacted 12+ brokers. Half don't even call me back. The other six have told us:

    - Your company is too small, you're wasting my time.
    - 2 x We don't write policies for companies based in Florida.
    - We don't cover Internet companies at all.
    - We don't cover Internet companies that handle other people's unreviewed content (see above).
    - If you buy this expensive tech E&O policy you don't qualify for first, maybe then we can help you with general liability, but no promises.

    they would find all sorts of loop holes to deny you the coverage payout
    Anymore I think you could pretty much say that about all types of insurance. I certainly never buy insurance with the expectation that it'll be there when I need it. If it is, I'll enjoy the pleasant surprise.

    What I've found asking around quietly to other companies in my position is that they all give me the same answer: lie about it. Either lie to the facility owner about having the insurance, or lie to the insurance company as needed to get "coverage" and get in the facility door, knowing (as you describe) that they will never pay a claim in a million years should one arise.

    Neither one of those options really works for me.

    Go with a company/underwrite that knows exactly what they are getting into. there will be a premium, but, its worth it..
    That's what I'm trying to do, but to the best of my ability to determine, there aren't any. Which, unfortunately, was what led me to post here in the first place.
    Last edited by jdw; 05-21-2012 at 05:18 PM.

  14. #14
    Quote Originally Posted by jdw View Post



    Anymore I think you could pretty much say that about all types of insurance. I certainly never buy insurance with the expectation that it'll be there when I need it. If it is, I'll enjoy the pleasant surprise.
    I expect our insurance to be there if we ever need it I was simply trying to warn you about the hazards of trying to slip into a policy without full disclosure or getting yourself wrongly categorized accidentally within a policy..

    we used Creechurh - they are underwriters I believe, but, we were able to go to them directly

    http://www.linkedin.com/company/cree...l-underwriters

    On the application form, web hosting was explicitly available as an option, and if selected, they ask you all sorts of related questions, etc.. very similar to PCI DSS forms if you are familiar with those..

    hope this helps
    www.cartika.com
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  15. #15
    Quote Originally Posted by cartika-andrew View Post
    I expect our insurance to be there if we ever need it
    I'm a cynic. ;-)

    we used Creechurh
    Based on their site, they're Canada-only. (And apparently even for US insurance companies, Florida is a special hell that many of them don't bother with. E.g. Farmers, which was mentioned earlier in the thread.)

  16. #16
    I'm a happy customer of your service and saw this thread just the other day. Here are my thoughts (although I'm not a lawyer):

    You didn't mention if the application or other materials had definitions or other clarifying content, so I'll assume they didn't.

    The phrase "without review and approval", without more, is rarely limiting. Review is not necessarily preview (if they had meant "preview" they would have said "preview") and "approval" doesn't say by whom. Perhaps review by other users of the forum (or other site) and approval by those other users suffices, including passive approval, "passive" as in no one objecting or there was objection but it wasn't well-grounded enough for action and you could have deleted if warranted. Sincde you post to that forum, I assume you read at least some posts and could delete if need be, and I think you did a few years ago; that may meet the insurer's demand. Commonly, forum rules at various sites indicate that site managers do not need to look at any posts but may if they want to. Maybe that's how they reconcile the statutory protection that comes with not inspecting with the insurers' demand that they do.

    I doubt "pornographic" has a legal definition ("we know it when we see it", if applicable, is not a definition). Pornography is not the same as obscenity, which is illegal.

    I was told by a nonlawyer that there is a world record for how many times one hair has been split. Lawyers split hairs, so to speak, when dealing with apparently conflicting legal demands. If you're concerned about forgetting what you meant in a context, keeping a memo to yourself with your relevant files may help you to refresh your memory later. Making conflicting statements can be perjury but making different answers when they're to different questions may mean no falsehood occurred, even if the answers seem at first glance to be in conflict. For example, two Federal agencies may want to know the amount of someone's wages, but because they define "wage" differently the same person's answers could be in apparent conflict yet truthful for both agencies. The other companies in your industry you asked, although saying they lied, may not have lied in every one of those cases.

    A lawyer may advise you if you are covered if you answered truthfully and the insurance contract supposedly does not cover you because of your answers but the insurer issued the contract anyway. It's possible your broker summarized or rewrote your application when forwarding it to a prospective insurer. If the broker did not forward your answers, that may affect coverage, but it may cause your broker to be liable to your firm for losses the insurance would have paid for.

    It's usually pointless to ask a firm issuing a contract whether it covers "x" after the contract is already issued. Many companies hire insurance managers. Insurance lawyers can usually give more reliable answers, which they do by reading the paperwork and applying the law of your local jurisdiction. If you know how to read legalese, you can do it yourself, but most laypeople won't recognize the traps and law school is three years long. For example, "including but not limited to" doesn't mean to a judge as much as it means to a layperson. I recently debated some people about copyright law; basically, they were computer geeks who apparently didn't know that they didn't know what they were talking about, and that's common; they knew about computers but not about copyright, but were confused because they saw how other software files deal with copyright. I saw a similar problem with a political candidate: she looked at what other candidates did and drew legal conclusions from that. It looks like a cheap way of circumventing the cost of getting a lawyer but that can ultimately be more expensive, such as if one person's error gets propagated across many people's works and looks like a widespread view when it really is a bad legal idea. A bad lawyer is also a bad idea, so one has to be chosen carefully. If a lawyer denies specializing (and many do), run away; only a general counsel could act as a nonspecialist and still the general counsel will bring in legal specialists anyway.

    Best wishes.

  17. #17
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    Quote Originally Posted by jdw View Post
    Hey all,

    We recently needed to get some high-limit liability coverage for a colo expansion and we got this gem back from our broker:



    Erm, yeah, we told you that on the original application and you issued the policy anyway. Now you have a problem with it? Yes, they do, they're dropping us and a fairly unconvincing "um, sorry" is the best they can do.

    This is what it said on our original application:



    We never tried to hide anything, we answered the questions and they had the answers. Now we're being told those are disqualifiers. (So basically they issued the coverage without any human ever reading our application.)

    This is for commercial general liability and property coverage. I don't see how it matters if the hard drives in the server rack we accidentally push over onto some poor sod in the next aisle have some customer's customer's dirty pictures on them. Maybe naughty bits are heavier than the regular kind? But OK, I can see that some companies might not want to handle adult content.

    But refusing to issue coverage because a host hosts blogs? How does any host have any insurance then? I spoke to the owner about this and asked him pointblank "How do you advertise that you offer insurance to hosting companies if you can't write coverage for anyone who hosts other people's content without approving it first?" He had no answer for that.
    A few questions come to mind after reading this, because I think you may be viewing the application incorrectly.

    1) Does your company own or run a websites that allow users (the public) to post content without review and approval?

    2) Does your company own or run a website that contains pornographic materials?

    There is a HUGE difference between your company owning and operating those types of sites, versus just strictly hosting them. I would certainly seek clarification on this.

    What your insurance company is worried about is this.. I the absence of moderated content, there is a major potential for lawsuits including, but not limited to, claims based on libel or slanderous comments, copyright infringement, and/or underage pornography. Why would they want to insure you if you were indeed participating in this type of site? It's a disaster waiting to happen, if that was the case.

    In addition the above, if you are merely the hosting provider or network transport provider, you can avail certain protections hosting providers are afforded. If the storage is at the direction of the user, then the culpability you have is vastly different than if it were your site. Your contributory factors also play a role in this, in how fast content is removed after a legal letter is sent etc...

    3) What is the amount of GL coverage you are looking for? What is the reason for the increase, is it just the expansion?

    -Steven
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  18. #18
    This thread is from 2012. We eventually did find suitable coverage.

  19. #19
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    jdw do you mind sharing with us who your current provider is?
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  20. #20
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    Quote Originally Posted by jdw View Post
    This thread is from 2012. We eventually did find suitable coverage.
    haha, hopefully it wasn't to recent you ended up finding coverage! Glad you did though, sounded like a pain!

    Since this thread is already reopened and I just recently had quite a pleasant experience with a new insurer I figured I'd share for those interested.

    Hanover (they offer personal and commercial insurance) ended up being our go-to. They offer an "errors and omissions" policy that covers any/all gross negligence (which may result from loads of different things) in regards to data loss and maintenance. This was specifically the additional coverage I was looking for as we already had a typical commercial policy that covered our business, personal liability, etc. but as many of you mentioned is hard to find, didn't properly cover the "tech" or "data" side of our business. In an effort to find a suitable plan for us they basically gave us the E & O policy for free and included it with the "business owners" policy as they call it. For anyone familiar with E & O you know it can be quite expensive which is why I thought this to be a particularly impressive move by them. The coverage we're now getting is close to twice that of our previous policy with the added benefit of now having a proper E & O policy behind us that together effectively covers our whole business.

    I highly recommend checking them out, feel free to PM me if you'd like and I'll give you the rep I worked with.
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