Should I Insure My New gTLD?

FairWinds Partners —  February 27, 2012

We have insurance to cover multiple aspects of our personal lives, as well as our business endeavors. One of the questions we’ve been hearing lately from new gTLD applicants is whether or not they will need insurance for their new gTLDs. It turns out, the answer – like the answers to so many other questions about new gTLDs – depends on how they plan to run their registry.

Currently, most of the larger existing registries carry general liability policies that range in the multiple millions of dollars. On the other hand, many smaller registries only carry liability insurance for their directors and officers (this is especially true of registries that operate as not-for-profits). One of the reasons for this is that the Registry Agreement that exists between a domain name registry and ICANN provides substantial legal cover in connection with indemnification of the registry by both registrars and registrants. For an illustrative example of that cover, we encourage readers to check out VeriSign’s .COM Registry-Registrar Agreement, particularly sections 2.14, 6.12 and 6.16.

When it comes to making decisions about insurance, new gTLD applicants should consider both the projected size of their new gTLD registry, and also whether they will be operating it as a “closed” / “single-registrant” model (where they do not sell second-level domain names to third parties), or an “open” model (where they do sell second-level domain names to third parties). There is no hard and fast rule, but it’s worth noting that in the case of a closed registry, where the domain name registrants will likely be part of the company operating the registry, there is a low likelihood of registrants suing the registry.

Alternatively, when the registry operator is selling second-level domains to third parties, the possibility for lawsuits and other issues becomes somewhat higher. Some may determine that the registry agreement offers sufficient cover, but others may want to acquire additional insurance to protect themselves on top of that. Either way, insurance is an option worth exploring for open-model registry applicants.