Social Un-Security: Social Media is all “trick” and no” tweet” for your business insurance

As everyone on this site knows, social media has captivated the globe and has changed how we communicate personally and professionally forever.  And the scary thing is it’s ever evolving and changing. The good news is that you have more ways to spread your message, sell your products and services, and profess your opinion to the world for free.

The bad news is that your insurance may not have kept up with the times and is stuck in 1979.

CGL– Personal Injury and Advertising Injury Coverage

Your standard Commercial General Liability policy has a coverage part called Personal & Advertising Injury.  Personal & Advertising Injury is meant to protect you from among other things, libel, slander, defamation of character and other grisly things that you do that could hurt someone’s reputation or infringe on intellectual property rights.

Your standard Commercial General Liability (“CGL”) policy typically excludes coverage for injuries "arising out of an electronic chat room or bulletin board the insured hosts, owns, or over which the insured exercise control" (ISO CG00 01 12 07).  Also excluded are Personal and Advertising injury "arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights" (ISO CG00 01 12 07). 

In Plain English, this means that your tweets, blog posts, Facebook notes, and other commentary on social media sites that you control appear uncontemplated by the outdated verbiage still used in today’s CGL policies. Certainly, you can fight it with a bad faith claim; however you know that means extra time, money, and anxiety. Bottom line, your tweets may not be covered!

There are increasing numbers of case law and opinions surrounding this issue. Our job today isn’t to bore you with a litany of these, but to alert you to your vulnerability, and to offer practical suggestions on how to manage risks arising from your social media practices.

So how can you get in trouble?

Let’s face it; the most intriguing blogs and tweets are the ones that offer contrarian, thought provoking, and often outlandish commentary. In sending out your opinions over these social media platforms, you or your employees may be critical of competitors, inadvertently offend another company or individual, and/or infringe on someone’s brand. If they sue you, you’re may be on your own because the CGL policy may exclude coverage.

So what do you do?

Fortunately, insurance companies have found a way to protect you.  For consultants and professional service providers like us, the coverage is included in our Errors and Omissions policies.  For non-professional businesses, there is Cyber Technology Insurance, which is meant to provide coverage for issues related to technology like social media, data breaches, and other nasty things like that.

You should to talk with an insurance professional – your broker, agent, or consultant.  It’s crucial that you examine your company’s social media practices, including how your employees use it and review this with your insurance policies to determine where there may be coverage lapses.

Reviewing social media practices will help you assess your vulnerability, and help you create a custom tailored Social Media Policy that works for your operations and employees, and that helps you sets up a plan to transfer your unwanted social media risks to an insurance policy that adequately protects your assets.  Your practices review and your Social Media Policy should cover the following for each form of social media in use by your company and employees:

• Company Social Media Strategies and Goals 
• Permitted Conduct (Public & Private)
• Encouraged & Rewarded Conduct
• Prohibited & Penalty Conduct
• Right to Monitor Public Info
• Company Rights and Remedies
• Training re Loss of IP Rights
• Training re 3rd Party IP Rights
• Confidentiality Rules

Your company probably should be active at some level in social media. If it’s not now, you’re probably falling behind the game at some level. Like any other risk you face in business, you need to make this part of a good risk management policy.

Don’t find yourself on the wrong side of a tweet. Go out and become “socially acceptable!”

About the Authors

Dan Weedin, CIC is a Seattle-based insurance and risk management consultant who turns his clients risk into rewards. He helps his clients save money, time, and frustration on their business insurance. He doesn’t sell insurance, nor does he ever accept fees or commissions from agents or insurers. He’s an advocate for his clients and helps them make smarter decisions on risk.

To learn more about Dan and how he dramatically improves his client’s condition, visit his web site at www.DanWeedin.com or his blog, http://Weedin360.com. You can also reach him by phone at (360) 271-1592 or by e-mail at dan@danweedin.com. 

Mark D. Walters is a business attorney, author, publisher and public speaker.  Learn more about Mark online at www.GeneralCounselToGo.com and www.KnowWhatYourLawyerKnows.com.  You can contact Mark at mark@walterslawfirm.com and by telephone at (425) 688-7620