Social Media and Insurance: What You Need to Know

Businesses are venturing into the digital landscape and utilizing this social media as a cheap, but typically effective marketing tool. While it may seem easy, and dare I say fun, to interact with your prospective and existing clients through this medium, there are certain situations companies should carefully navigate through, to avoid any unintended negative consequences. Even a company who exercises sound risk management practices regarding their program may encounter a situation which gives rise to a claim. A combination of risk management practices, and appropriate insurance coverage can help mitigate any costs related to unexpected claims.

If a company has any online operations, including but not limited to, having a website, transferring sensitive information digitally, accepting payment electronically, collecting/storing sensitive data regarding customer or employee personal information, purchasing a cyber policy is crucial. While cyber policies can be written to provide a broad array of coverages, they are often limited to advertising injury related only to those that originate from a company website. Depending on the coverage form selected, a lawsuit resulting from activities may not be covered under the policy.

The good news is that there are policies available, often as an additional coverage form or endorsement to a cyber policy, to protect a company for claims arising from their presence on social media. One policy example is called the Media Content Coverage policy. This policy is especially ideal for companies who aggressively use as a form of brand recognition and to disseminate content. This type of policy would protect a company against a lawsuit pertaining to the Digital Medium Copyright Act, or a suit due to libel or slander from a third party.

An example of a claim related to the Digital Medium Copyright Act would be if a company posted copyrighted material infringing on the author's sole right to said material. In an event like this, a Media Content Coverage policy would be triggered to defend the insured in such a lawsuit from a third party. One way a company can avoid such a suit is to be sure its marketing team is intimately aware of the Digital Medium Copyright Act and offer training on how to determine if a digital article is copyrighted and subject to the act. However, in the event an article slips through the editorial cracks, a Media Content Coverage policy would lessen the cost of a lawsuit.

Libel claims can arise from , even if the libelous comment did not originate from your company. Imagine the following scenario: The local flower shop, Best Flowers, actively maintains a Facebook page. A loyal, well-meaning customer comments on the page about how awesome Best Flowers is and, at the same time, says negative and untrue comments about a competing local flower shop, Amazing Flowers. If Best Flowers takes no action regarding the comments, Amazing Flowers could sue Best Flowers for damages arising out of the alleged libel. If Best Flowers has a Media Content Coverage policy, it will cover the cost of defending Best Flowers in a lawsuit.

With the marketing scene existing almost fully in the digital space, more companies are going to climb aboard the cyber band-wagon. Companies can attempt to make themselves aware of all possible situations that could lead to claims and litigation, and take steps to follow sound risk management practices, but claims scenarios can still arise. Considering Media Content Coverage is a sound idea. If you are currently engaging with a audience, but are unsure or unaware of the risk associated with it, contact ISSI for a full analysis of your risk and exposures to loss.