Social Media Risk Exposures

An attorney weighs in on the risks involved

Social Media exposureThe Internet and social media are having an increasingly effect on businesses, which also can cause substantial loss exposures, according to Daniel Maldonado, an attorney with Kunz Plitt Hyland & Demlong.

Social Media Liability can be defined as a liability exposure arising out of social media or networking sites such as Facebook, Twitter, YouTube, and LinkedIn. The risks involved in using these social media sites include possible insurance claims filed for libel, slander, privacy invasion, intellectual property infringement, and harassment.

What risks does your policy cover?

The majority of commercial insurance policies include personal and advertising injury that offers general coverage for libel, slander, insulting remarks as well as invasion of privacy. Some Homeowner policies also can provide protection of personal and advertising injury. A number of carriers may provide coverage for personal and advertising injury on renters policies. The 2001 ISO Form, defined advertisement  in part as “material placed on the Internet or on similar electronic means of communications.” This ISO Form also added Exclusion K, which excludes coverage for personal and advertising injury arising out of chat rooms and electronic bulletin boards.

A businesses’ networking-related exposures usually correlate with the business activities. For example, a business manager or supervisor may broadcast information regarding termination of an employee or reveal personal information. Personal networking exposures can extend to criminal accusations, infidelity, disclosure of financial records, failure to disburse child support payments, or posting inappropriate images or videos.

How far the risks can reach

Sometimes insurance claims involve older posts, which can affect the cost of defense; the costs of electronic discovery can include subpoenaing data or information from the social networking site. In addition, depending on the nature of the claim, the insured may be faced with several lawsuits in numerous jurisdictions including countries outside of the U.S. Social media allows for effortless  libel, slander, and privacy invasions when derogatory comments can be broadcast globally rather than  in the privacy of a person’s home. As a result, the damage of an insurance claim will be more significant due to the number of people it reaches.

It is suggested that if a client utilizes social media or networking sites, offering optional personal injury protection for the homeowner or rental policy would be beneficial, as well as businesses obtaining a Commercial General Liability policy, which typically includes personal injury coverage as well.

Source: “Rough Notes;” Bruce Hicks; June 2012

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Categories: General Liability, Risk Management, Tech Insurance

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