Most homeowners insurance policies exclude coverage for liability relating to "business pursuits." Although the exact formulation varies by state, the courts generally define a "business pursuit" as a continual or recurrent activity carried out for financial gain. In most states, courts give a broad interpretation to "business pursuits," drawing in almost any activity that results in financial gain.

If your online activities are not covered under your current insurance policies, a growing number of companies are offering media liability insurance. While these policies are expensive -- perhaps prohibitively so for a newly formed business -- they can also be quite comprehensive. They typically cover costs to defend against suits brought for:

Even frivolous lawsuits dismissed at a relatively early stage of the litigation can be expensive to defend, and the cost skyrockets the longer the litigation continues, particularly if judgment is rendered against you. While most lawsuits never get to trial, if you lack the money to carry out a vigorous defense, the only option available to you may be to settle (perhaps even to take down the allegedly offending content or even your entire site) regardless of the merits of your defense.