New insurance coverage protects dealerships from the dark side of e-commerce.

That includes random hackers, database thieves or malicious competitors.

The pioneering insurance policy aimed to guard dealers against e-risks is available from Universal Underwriters Group, the first independent insurer established to cover dealership buildings against natural hazards, fires and thefts.

The Internet explosion in the auto retail field dramatizes the urgency of obtaining what Universal calls E-Risk Protection.

Universal's director of marketing, John M. Weber, warns that computer "virus" attacks befell more than half of all corporations in 1999.

"These attacks brought about information losses, data/system integrity problems or denial-of-service losses in between 10% and 15% of the victimized companies," says Mr. Weber.

Five major exposures face dealers and related e-business operations, says Universal Underwriters. These are:

1. Unauthorized access to or theft of e-business traffic and data (including customer lists and financial records).

2. Computer viruses that damage data or covered systems.

3. Attacks on covered systems which take up so much of a shared resource that performance or access to e-business activities is lost.

4. Alleged unauthorized e-commerce transactions.

5. Unintentional programming and processing errors made by authorized personnel, resulting in third party claims.

Mr. Weber says that the E-Risk policy is broad in the areas of potential damage it insures for dealers. These areas are:

* Loss of business income, including costs of investigating the causes of the shortfall plus any legal defense costs.

* Damage to the dealer's reputation and costs of repairing the injury.

* Restoration or replacement of lost intellectual property, such as customer or lead files.

* A "difference in conditions" provision, giving the E-Risk policy priority status above general dealership damage policies that may mention electronic commerce tangentially.

* Interruption of service liability for claims made by others.

* Electronic publishing liability-defamation, character or product disparagement, libel, slander, invasion of privacy, copyright infringement, plagiarism or "misappropriation of ideas."

Premiums for Universal's E-Risk policy, which is issued by the Fidelity and Deposit Companies of Universal's parent, Zurich Financial Services Group, start at $6,000 per year for a minimum dealer website, according to Mr. Weber.

Premiums increase with addition of services to the site.

Other dealership insurers are developing similar programs in the fledging electronic-insurance arena.

"It sounds like a necessity for any dealer, but perhaps Universal and other insurance carriers will also offer the plan through an ownership group or state association," said Jackie Mitchell, general manager of Bergstrom Toyota-Honda-Lexus, Oshkosh, WI, a member of the 18-dealership Bergstrom network that blankets northern Wisconsin.

The advent of Internet insurance is a "welcome development," says Carl L. Barnett, Sr., president of Barnett Pontiac-GMC, Houston, and a National Automobile Dealers Association director.

He adds, "Dealers are downloading a lot of confidential data on their computers and websites, and NADA hears constantly of members where abuses arise from hackers or unintentional errors."