Cyberbullying: Finding the Insurance Coverage Sweet Spot

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by Matt Cullina

Blogs, Facebook, Twitter, e-mail. Keeping in touch with friends and family has never been easier, and teens and tweens are often power users of social media, perhaps more than their parents realize. This has exposed families and their insurers to liabilities neither party is prepared for.

In 2010, a study conducted by the Kaiser Family Foundation in 2010 found that 46 percent of eight to 18-year-olds engaged in text messaging. And the kids doing the texting are serious about it; those who texted reported sending an average of 118 messages in a typical day, according to the Kaiser Family Foundation’s “Generation M2: Media in the Lives of 8- to 18-Year-Olds” study.

But the downside of all those connections can’t be ignored. The more channels used to communicate, the more avenues cyberbullies have to intimidate and harass their victims. In the Pew Research Center’s 2011 Internet and American Life Project titled “Teens, Kindness and Cruelty on Social Network Sites,” 88 percent of teens who used social media said they’ve witnessed cruelty on social network sites, and 21 percent of teens even admitted to participating in the online harassment.

As this electronic aggression continues to escalate, the specter of facing litigation over cyberbullying is also growing, and if the risks to property lines insurers are big today, they’re likely to get bigger tomorrow. Verdicts in electronic aggression lawsuits resulted in awards to the tune of $87 million in 2012, according to data gathered by GenRe Research. And when a minor was the culprit in those cases, it’s likely the parents asked their homeowner or personal injury insurer to help pay the costs.

Ambiguous and outdated policy language, along with overly broad coverage solutions, may be putting carriers in an expensive position, but a trio of coverage options can help insurance companies find the risk management sweet spot that’s right for them:

Restricted Policies

For carriers with little appetite for the electronic aggression sector, restricted policies virtually eliminate the potential for claims related to cyberbullying. In this type of policy, potential gaps that might otherwise allow a claim under either a personal injury umbrella or a homeowner’s endorsement have been filled. Definitions related to the publication of material (whether oral or written) are removed or added to the existing list of exclusions. References to libel, slander and defamation are also gone. “Electronic means” is clearly defined, and “subsequent or indirect sharing, forwarding, posting or linking of direct communication of an insured” is redefined as one offense rather than separate offenses.

Additional exclusions further limit the policy’s reach. Bodily injury and property damage resulting from electronic aggression are excluded, as are occurrences resulting from physical or mental abuse. Intentional and criminal acts are also excluded. Language denying coverage, even if the insured is unaware of the offense – a not uncommon occurrence when it comes to the actions of minors – replaces the standard verbiage. Note, however, that if domestic violence comes into the picture, some states may require a provision that allows for coverage.

Carriers may choose to continue to include libel, slander or defamation under a personal injury umbrella, but restricted policies should have some exclusions: the publication – again, either oral or written – of materials that are known to be false or where the publication occurred prior to the policy period; actions that are known to violate another person’s rights; and actions conducted through electronic media that result in injuries.

Semi-Restricted Policies

These can be considered the next-step option in mitigating a carrier’s risk without completely eliminating the coverage available to policyholders. In these policies, exclusions and more restrictive definitions either come under the personal umbrella policy or the homeowner’s endorsement. Persistent or continual bullying through electronic means is excluded, meaning that coverage is intended only once.

Smaller liability sub-limits allow for better risk management while still continuing coverage for property damage and personal/bodily injury. Defense costs may also be limited. And regardless of the number of injuries or damaged parties, policy limits continue to be the final word on payable damages.

The severability clause remains intact, but adds a provision limiting liability for any single occurrence or offense. Civil fines, penalties and punitive or exemplary damages are also excluded. A due diligence section may be added or expanded that requires insureds to monitor household minors’ use of electronic media. Acts committed by non-minors as defined by the policy (typically those 18 years of age and older) are also excluded.

Non-Restricted Policies

Similar to semi-restricted policies, non-restricted policies allow for some level of coverage but still limit a carrier’s exposure in the event of a cyberbullying occurrence. Persistent and continual bullying, for example, is not excluded in a non-restricted policy. In addition, no maximum limit is set for coverage of defense costs, and damages are covered up to the policy’s (or endorsement’s) limit. However, limits exist for penalties and statutory fines, which are covered up to the lesser of either the limit opposed by the governing authority or $10,000. The severability and due diligence clauses from the semi-restricted policy are mirrored here, as is the exclusion of acts committed by those no longer considered a minor.

Electronic aggression is still an emerging issue, and—because kids are inherently evolving creatures—policyholders’ needs may change as time goes on. With a range of options available, carriers and agents can more finely tailor policies to match each client’s risk profile while also mitigating their own potential for exposure.

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Cullina is chief executive officer of IDentityTheft911, an identity management and recovery service company in Scottsdale, Ariz. He has 15 years of insurance industry management, claims and product development experience. Previously, Cullina led personal product development initiatives at MetLife Auto & Home Insurance Co.’s, managed claims litigation and served as a corporate witness for Travelers Insurance and the Fireman’s Fund Insurance Co. Cullina can be reached at: mcullina@IDT911.com.


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