Posted on 20 Jan 2009
With the growing popularity of Internet social networking and blogging sites such as Facebook and MySpace, insurers are pondering their cyberspace possibilities. The Internet, with its often-anonymous nature and its potential for reputation-damaging information being disseminated to a massive audience, presents a challenging frontier.
Insurers with high-net worth clients, such as Chubb, offer Internet liability coverage in the policy form it uses for homeowners insurance, said Pete Spicer, communications manager for the company. The policy covers personal injury due to libel and slander, for instance.
“This really is a whole emerging area,” Spicer said. “The permanence of what is written and the amount of people who can see it – there could be some negative implications. From an overall insurance industry standpoint, I know it is an issue that is being tracked but it is an issue that is very, very subjective.”
The Supreme Court has heard no cases regarding a student’s right to online chatter and other cases shed no clear light on Internet ethics.
In the mass market “there is largely no coverage at all,” in a standard policy, said Bill Wilson, associate vice president of education and research for the Independent Insurance Agents & Brokers of America. Bodily injury in standard policies includes bodily injury to something tangible. There is no coverage for libel or slander.
“If it was covered, you’d see the industry reacting,” Wilson said. “Insurers would begin to draft exclusions if it affected them. Right now, it is so unknown; I don’t think many want to cover it.”
State Farm has begun to offer liability coverage for slander and libel as an endorsement to a homeowners policy, said spokesman Jeff McCollum, but it is a relatively new product. “It’s not coverage everyone feels they need, but there is a large group of customers who want it,” McCollum said. “Consumers are facing new and challenging risks from computers and the Internet, so it makes sense for us to offer it.”
Wilson said endorsements like this can be added to most homeowners policies at a minimal cost, maybe $20-$25 annually. Though there are some exclusions, the added insurance covers oral or written slander or libel, violations of privacy, false arrest and malicious prosecution.
“The add-on is well-worth it,” Wilson said. “I’ve been recommending it.” The same endorsement covers litigation against homeowners from music downloads, he added.
It is hard to prove libel and slander. An intentional act must be established. And everyone is entitled to his or her opinion. In addition, many online postings are anonymous. These are the issues being argued in court in cases gaining attention because of their controversial nature.
For instance, a Florida high school student began a group on the social networking site, Facebook, devoted to criticizing one of her teachers. Other students were invited to weigh in. The school district suspended the student for “cyberbullying.” Now the student has filed a lawsuit against the school, backed by the American Civil Liberties Union.
“It’s a free speech issue now,” Spicer said. “There are no precedents, no boundaries, established yet. It has gone to the high courts.”
Frank Ramsey, senior consultant with Towers Perrin, said historically “activity in litigation does significantly drive the industry to make changes to policies.” However, right now, it’s normally a business that gets sued, because “most plaintiffs’ attorneys know people don’t have insurance coverage.”
Attorney Jeff Pincus, partner at New York law firm Lewis Johs, said often a site that provided the medium for a user to post comments, pictures or videos will be sued. Even then, the hosts are normally protected by statutes that do not hold them responsible for what is posted.
“Lots of times it is impossible to sue the poster because you have to find them and identify them,” Pincus said."Even when you do find them, you still have the other issues to deal with, such as establishing intent and damages." Pincus said he expects these types of cases to reach the federal level.
Whether liability generated from the Internet at home becomes a bigger trend depends on these court decisions as well as the awards given to plaintiffs and billed to defendants. One thing is for sure, using the Internet as one's personal soap box is not going to end.
"When you were angry about something, you used to have to go to a public meeting or write to the newspaper, maybe take out an ad," Pincus said. "These things took time and money and your audience was limited. The Internet gives you a much larger forum."