I managed the DNS for a law firm. The credit card on file expired. GoDaddy sent the warnings to my old email. The domain lapsed. A squatter bought it immediately and put up a gambling site. The law firm is losing clients by the hour and is demanding $50,000 to buy the domain back from the squatter.
Key Takeaways
- Administrative Errors: This is not a “creative” error; it’s an admin mistake. Most E&O policies cover this.
- Mitigation Costs: Will the insurance pay the squatter? Maybe. It’s often cheaper to pay the $50k ransom (settlement) than defend a $1M lawsuit for lost business.
- The “Services” Definition: Did your contract include “Domain Management”? If you did it as a “favor” and it wasn’t in the contract, the insurer might say you weren’t acting as a professional.
- The “Prior Knowledge” Exclusion: If you saw the warning emails and ignored them, that’s negligence. If you never saw them, it’s an error.
The “Why”: The Scope of Services
The Trap:
If you are insured as a “Graphic Designer,” but you were managing domains (IT Admin work), the carrier could deny the claim for “Activities not declared.”
Always ensure “Web Hosting” or “DNS Management” is listed in your business description.
The Investigation: I Quoted 3 Major Carriers
1. Thimble
- My Analysis: Their policy is simple. If you selected “Web Design,” domain management is usually incidental and covered. But limits might be low ($1M).
2. TechInsurance (Broker)
- My Analysis: They find carriers like Travelers or Hartford. These carriers understand that DNS is part of the package. They will likely cover the claim as a “failure to render services.”
3. Travelers
- My Analysis: They have a broad definition of “Technology Services.” Losing a domain is a classic tech E&O claim. They would likely negotiate with the squatter to mitigate the loss.
[IMAGE: Screenshot of a “Domain Expiry” notice and a squatter’s “For Sale” page]
Comparison Table: Admin Error Liability
| Carrier | Covers Domain Loss? | Pays Ransom/Buyback? | Best For… |
| Travelers | Yes | Likely (Mitigation) | IT/Web Pros |
| Thimble | Yes | Unclear | Freelancers |
| Standard GL | NO | NO | Nobody |
Step-by-Step Action Plan
- Contact Registrar: Sometimes there is a “Redemption Period” (30 days) even after expiry. Check this first.
- Notify Carrier: “I negligently failed to renew a domain, resulting in financial loss.”
- Do Not Pay Squatter Yet: Let the insurance adjuster handle the negotiation. They are pros at settlements.
- Update “Services”: Call your agent and make sure “Domain Management” is on your policy file.
FAQ
Is this Cyber insurance?
No. No hack occurred. It’s pure E&O (Error).
Can I blame the client for the expired card?
Yes! That is “Contributory Negligence.” Your lawyer will argue it was their card, so their responsibility.
What if I didn’t charge for it?
If you did it for free, you might still be liable (“Gratuitous Agency”), but damages might be lower.