Does your company's social media presence need proper business insurance coverage? The answer might just be yes. As more and more small and mid-sized companies expand their media presences, risks accompany the rewards.
With social media campaigns, businesses have the ability to offer goods and services to an expanded base of customers in unique ways. Nonetheless, there is a catch.
The risk: Potential customers, other businesses or other stakeholders could be at best unreceptive and at worst offended by social media campaigns. The larger your company's media presence gets, the greater the risk it poses. One big risk: Lawsuits.
In 2010, the American civil liability system cost businesses about $265 billion in 2010 in direct costs, and that price rises every year, according to the actuarial consulting firm Towers Watson. The more people you reach, the greater the potential for legal action.
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To build protection for your company, start with a commercial insurance or business owners' policy (BOP). These include property insurance and general liability that can help protect you from lawsuits resulting from company practices.
Following are some options for protection:
Liable for libel: general liability insurance
Your general liability broadly protects you from third party lawsuits brought against you for reasons such as harm to another company or individual's reputation, copyright infringement, libel, or slander. Generally, this coverage could help you in the case of a social media lawsuit.
However, general liability insurance is just that: general. Depending on the commercial policy, a claim made for media-based lawsuits may or may not receive coverage. Examine your company's commercial policy or BOP to make sure you're covered for media-related lawsuits and check to see that your limits are set high enough.
Under an umbrella policy
If your business's liability limits don't fit your growing needs, you can raise them by purchasing an umbrella policy, which can provide more complete protection. It can raise limits for general liability, commercial auto insurance, and employers' liability.
The only problem with the two above options? Reliance on them assumes that your general liability insurance would cover claims resulting from social media activities. In reality, the bigger your presence, the less likely it is to be covered by such general coverage. As you expand your web presences, you may need to purchase a more specific, standalone media liability policy.
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More with media liability coverage
Media liability protection, also called entertainment errors and omissions insurance, is a specific type of errors and omissions liability designed for publishers, broadcasters and other media-related firms, according to the International Risk Management Institute. Though media liability policies originally only existed for publishers and the like, they are now becoming more prevalent as companies build brands through different media types. You can tailor policies to your specific business on a named perils basis and get the exact coverage you need. Generally, they can provide protection for:
- Defamation/ libel/ slander/ disparagement. This can help make sure your company isn't downed by someone offended by your social media presence – say by someone who comments on the site.
- Invasion of privacy. This happens most often with photography, especially when the photographer doesn't get releases for using someone's image on a commercial page.
- Copyright infringement. This helps in case you accidentally publish something with copyright issues.
- Say you, or your social media coordinator, didn't know that a page, tagline, or promotion had already been written by someone else.
- Breach of implied contract, license agreement, or product placement agreement. If you didn't perform to your partner company's standards.
Cutting cyber risk
In addition to the threat of lawsuits, an expanded media presence also opens your company to greater cyber risk. Ask yourself if your small or mid-sized business can withstand a high-profile data breach the likes of Home Depot, Target, or JPMorgan Chase &Co. If it can't, consider purchasing cyber risk insurance. It can help pay for:
- Lawsuits related to network info and security, communications and media liability, or regulatory defense expenses.
- Material costs of recovering customer data such as forensic investigation, crisis management, cost of contacting customers, advertising to rebuild reputation, and computer program and electronic data restoration.
If you worry about how to protect your company and its expanded social media presence, consult a licensed commercial insurance agent. Additionally, you can put measures in place to halt social media lawsuits before they occur.
Comprehensive employee training programs and public company guidelines can help you make sure that the content on your sites and on your employees' sites meet legal standards. Even with these programs, it's good to have insurance in place. Just in case.