Social Media is changing the way individuals and companies communicate with each other. With this new technology and form of communication, there are risks that must managed. Based on the articles below, some of the liability exposures a company faces with their social media activities can include: claims of false advertising, unfair consumer commercial practices, defamation, and patent, copyright and trademark infringement. For this discussion, we can classify companies and their social media exposures into three distinct groups.

The most obvious group are companies whose primarily business is providing content or social media services thru the internet. This group faces the greatest exposure to the types of lawsuits mentioned above. Examples would be Facebook, Match.Com, Online Gaming Companies, Yahoo, or any publisher of electronic only content. It is important for them to have a broad General Liability policy along with a hybrid Technology Errors and Omission (Tech E&O), Media Liability, and Data Liability policy. It is important for these types of companies to examine their Tech E&O policies to make sure they are not on old policy forms that don’t have robust language that includes social media related activities.

Another distinct group of businesses that should be concerned about Internet exposures are print publishers and content providers that have added social media and online publications to their business portfolios. These businesses along with general liability have traditionally carried Media Liability (or Publishers Liability). It is important that they now add Tech E&O coverage and Data Liability. The online content is now a tech service being provided and the personal identifying information being collected with the usernames and passwords is most likely enough to trigger notification laws. Special attention should be paid to policy language to make sure social media activity and activities of bloggers are covered.

The last group that needs to examine their internet activities is businesses that sell tangible goods and services with an online presence. That could be any company making a product and/or selling a product online. Examples would be companies like Macy’s, Amazon, Craftsman, etc. The biggest exposures these businesses face are hackers accessing their customers’ personal identifying information including credit cards. Data Liability is a must for these companies. The notification laws vary from state to state and only the largest companies with legal departments are remotely equipped to respond to these types of claims. Companies that outsource their consumer transactions are still exposed to lawsuits and claims through vicarious liability. These companies should also be looking at purchasing Media Liability to protect them from lawsuits regarding their online content and activities of bloggers leaving consumer reviews.

The exposures scenarios mentioned above are just a sample of the many things a business can face in the online world. If your business has a website and/or a Facebook page, it is important to discuss this with a broker who specializes in protecting against internet exposures. Jason Holmes, ARM has had great success at insuring all types of businesses mentioned above.

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