insurance community university cyber risk and the personal lines account 1 the webinar will begin...

Insurance Community University

Cyber Risk and the Personal Lines Account

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DisclaimerInsurance forms and endorsements vary based on insurance company;

changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is

intended as a general guideline and any interpretations provided by the instructor or the creator(s) of this material do not modify or

revise insurance policy language. In providing these materials, the authors assume neither liability nor responsibility to any person or

business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials

provided. Copyright 2010 – 2013 All Rights Reserved

www.insurancecommunitycenter.com

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Your Instructor Today

Laurie Infantino, CIC, AFIS, CISC, ACSR, CISC, CRISPresident and Co-Founder of

The Insurance Community Center


What This Course Will Cover

1. Identifying Risk2. How does the Homeowners respond

to Cyber Risk1. Does the Personal Injury on a

Homeowners Policy provide coverage?

3. Are there special endorsement/policies available for this exposure

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Let’s Define Some Basic Terms

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“Personal Injury” (Wikipedia)

• Personal injury is a legal term for an injury to the body, mind or emotions, as opposed to an injury to property.

• The term is most commonly used to refer to a type of tort lawsuit alleging that the plaintiff's injury has been caused by the negligence of another, but also arises in defamation torts. Damages include bodily injury, intentional infliction of emotional distress (IIED), and negligent infliction of emotional distress

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“Defamation” www.dictionarylaw.com • Defamation is the act of making untrue

statements about another which damages his/her reputation. If the defamatory statement is printed or broadcast over the media it is libel and, if only oral, it is slander.

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“Libel” Definition (Wikepedia)

• Libel is defined as defamation by written or printed words, pictures, or in any form other than by spoken words or gestures. The law of libel originated in the 17th century in England. With the growth of publication came the growth of libel and development of the tort of libel

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How to prove “libel” Wikepedia

• In the United States, the person must prove that the statement was false, caused harm, and was made without adequate research into the truthfulness of the statement. These steps are for an ordinary citizen. For a celebrity or a public official, the person must prove the first three steps and that the statement was made with the intent to do harm or with reckless disregard for the truth, which is usually specifically referred to as "proving malice".

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“Slander” Definition (Wikepedia)

• The common law origins of defamation lie in the torts of "slander" (harmful statement in a transitory form, especially speech), each of which gives a common law right of action.

• The fundamental distinction between libel and slander lies solely in the form in which the defamatory matter is published. If the offending material is published in some fleeting form, as by spoken words or sounds, sign language, gestures and the like, then this is slander.

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Some Issues

• Creating a website– For yourself

• Example of coach

– For your in home business

• Posting on internet (real exposure)– Facebook– U-tube

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The case of the coach

• The coach of a elementary soccer team decided to set up a web site for the team.

• He had pictures of all the players• He had someone film the games and

upload them to the site• He got sued by a parent for not getting

permission to upload a picture of his son

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The children’s Online Privacy and Protection Act (COPPA)• Governs the collation, use, and disclosure

of personal information from children under the age of 13 that are online. Under the FTC rule, the online service operator is now responsible or liable for the following:– Must notify parents of the personal

information that will be collected and seek permission for geolocation information, videos, photos and other personal information.

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http://www.coppa.org/coppa.htm (2) OPERATOR.—The term "operator"— (A) means any person who operates a website located on the Internet or an online service and who collects or maintains personal information from or about the users of or visitors to such website or online service, or on whose behalf such information is collected or maintained, where such website or online service is operated for commercial purposes, including any person offering products or services for sale through that website or online service, involving commerce—

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Background

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Scary Facts (GenRe Research 4/12 report)• Grip Sites suffix

– 2008 20,000 grip sites (today no estimates, too high)– “sucks”; “stinks”; “bites” “I hate”

• Facebook– 800 million globally– 160 million Americans

• Linkedin– 135 million half from U.S.

• MySpace (Shrinking)– 37.7 million U.S. (2/2011)

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Uploading Videos

• Close to 14% of U. S. Internet users (34 million Americans) have uploaded videos online.

• Thirty-five hours of video is uploaded to YouTube every minute

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Polling Question #1

• Do you have children between the ages 10 to 18?

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Polling Question #2

• Are you children or anyone in your household involved in ANY of the following social networking activities:– Face Book– LinkedIn– Blogging– Insta Gram

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Situations

• Incidents: Teens taking compromising video of other teen, teachers, school administrators

• Romantic encounters videoed and posted online without the knowledge or permission of one of the participants.

• Acts physical bullying videoed and posted online. Any distribution of photos, videos or personal information can give rise to invasion of privacy, infringement, defamation and other claims.

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Some Recent Studies

• 12% parents (worldwide) say their child has experienced cyber bullying (Ipsos, Published 1-2012 )

• 1,000,000 children were harassed, threatened or experienced cyber bullying on Facebook in the past year (Consumer Reports 2011 (US)

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Polling Question #3

• Have you had any claims in your office relating to incidents like this on the internet or social media?

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Polling Question #4 & 5This “really” happened!• The case of the CSR going on their

facebook account to spread the word about a producer, she hated, getting fired.– Covered Not Covered?

• The same case BUT the CSR posts the remarks on the company face book account– Covered Not Covered?

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Lawsuits in the Infancy—but coming soon!• As of 2012, litigation activity has yet to

reflect the increasing exposure.• Majority of lawsuits were settled out of

court.• December 2006 Casualty Matters listed

89 court awards against individuals who posted items on the internet that ranged from $5,000 to $28 Million.

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Lawsuits in the Infancy—but coming soon!• Takeaways from litigation

1. Despite significant increases in exposure, there he been few verdicts

2. When such cases are adjudicated in court, juries seem willing to award significant damages to plaintiff.

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Examples

• Courtney Love defamed a fashion designed in a Tweet and case settled for $430,000.

• Two surgeons were awarded $12 million after a former patient developed a serious infection after plastic surgery and set up a gripe site to criticize the practice.

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Cyber Bullying

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“Cyberbullying”http://apps.americanbar.org/litigation/committees/insurance/articles/novdec2012-cyberbullying-homeowner-policies.html• Bullying can occur in person or

through technology (electronic aggression, or cyberbullying).

• “electronic aggression” or “cyberbullying” poses new coverage issues for policyholders and insurers alike.

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“Cyberbullying”http://apps.americanbar.org/litigation/committees/insurance/articles/novdec2012-cyberbullying-homeowner-policies.html• As may pertain to coverage issues, the Centers

for Disease Control and Prevention (CDC) defines bullying as “a form of youth violence” that which includes “[a]ttack or intimidation with the intention to cause fear, distress, or harm that is either physical (hitting, punching), verbal (name calling, teasing), or psychological/relational (rumors, social exclusion),” and which “can result in physical injury, social and emotional distress, and even death

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“Cyberbullying”http://apps.americanbar.org/litigation/committees/insurance/articles/novdec2012-cyberbullying-homeowner-policies.html• Electronic aggression is bullying that

occurs through email, a chat room, instant messaging, a website, text messaging, or videos or pictures posted on websites or sent through cell phones.

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“Bullycide”

• Over a dozen child suicides over the past few years have been associated with cyber bullying. It happens enough that the term “bullycide” has now been coined.

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It is NOT just an insurance issue—www.cyberbullying.us • Forty-nine states now have bullying laws in

place and the vast majority of those (45) include provisions for electronic forms of harassment.

• The wording in these laws differs significantly from state to state

• All require schools to have policies in place to prohibit bullying and most prescribe school-based sanctions for participating in bullying.

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It is NOT just an insurance issue—www.cyberbullying.us • An ordinance is basically a law or legal decree passed

by local municipalities (usually a city, township, or county) that has the authority of law within the geographical limits of that municipality.

• Most cities have ordinances that govern parking, prohibit loud noises from vehicles, specify building standards, or require the licensure of pets, for example.

• If one is found to be in violation of a municipal ordinance, the person is usually fined a relatively small amount of money.

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It is NOT just an insurance issue—www.cyberbullying.us -• These laws and a long line of court case

law states that cyber bullying that occurs on school property or that substantially disrupts the school environment is subject to school authority and discipline.

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It is NOT just an insurance issue—www.cyberbullying.us • Legislative language wouldn’t address

adult behaviors. Those should be handled in civil court (intentional infliction of emotional distress, harassment, false light, etc.) or in rare cases criminal court (harassment, stalking, misuse of computerized communications devices)

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Holding Parents Responsible for their Child’s Bullying• Without a doubt, parents have a duty to

do their part to ensure that their kids do not bully others.

• 1903, Colorado was the first state to make it a crime to “contribute to the delinquency of a minor.”

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Holding Parents Responsible for their Child’s Bullying• California law generally requires parents

to “exercise reasonable care, supervision, protection, and control over their children”

• Parents who fail in this mandate could be found guilty of a misdemeanor and sentenced to jail. California (http://caselaw,findlaw.com/ca-court-of-appearl/1190445.htm)

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Let’s Look At the Policy Language

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Increasing Personal Injury Exposures• “Insurers providing Homeowners and/or

Personal Umbrella coverage have greater exposures to contemplate today than they did a decade ago.

• Until recently, insurance claims arising from home internet access were not much of a concern. – Today, the exposure is far greater as the result

of the explosive growth in the use of gripe sits, chat rooms and blogs.

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Increasing Personal Injury Exposures• The basic legal issues are not necessarily new;

concern about defamation, invasion of privacy and trademark dilution. What has changed is the sheer number of websites, and blogs (personal journals on the web) in particular, raising these liability issues and exposures for Homeowners and Personal Umbrella carriers to new heights.”

• www.genre.com

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Homeowners 3--HO 00 03 05 11 (page 1 of 24)• Definitions

– In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household.

– "Insured" means:• You and residents of your household who are:

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Homeowners 3--HO 00 03 05 11 (page 17 of 24); Section II Liability• If a claim is made or a suit is brought

against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies

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“Bodily Injury” Definition (Page 1 of 24)• "Bodily injury" means bodily harm,

sickness or disease, including required care, loss of services and death that results.

• NOTE: Personal Injury is NOT included within this definition

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ACE Homeowners (Page 22 of 30)

• If a claim is made or a suit is brought against an insured person for damages because of bodily injury, property damage or personal injury caused by an occurrence to which is coverage applies anywhere in the world, we will pay up to our limit of liability for the damaged for which an insured person is legally liable.

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ACE Homeowners (Page 3 of 30)

12.Personal Injury means injury arising out of one or more of the following offenses:

A. False arrest, detention or imprisonment;B. Malicious prosecution;C. Wrongful entry or eviction;D. Defamation of character, libel or slander;

orE. Invasion of privacy

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ACE Homeowners (Page 3 of 30)11.Occurrence means:

a. An accident, including continuous or repeated exposure to substantially the sane general harmful conditions, which occurs during the policy period and results in bodily injury or property damage; or

b. An offense, including a series of related offenses, committed during the policy period and results in personal injury.

CAUTION: Aggregate Language

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Exclusions

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Expected OR Intended Injury

• "Bodily injury" or "property damage" which is expected or intended by an "insured", even if the resulting "bodily injury" or "property damage":a. Is of a different kind, quality or degree

than initially expected or intended; orb. Is sustained by a different person, entity

or property than initially expected or intended

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“Business”

• "Bodily injury" or "property damage" arising out of or in connection with a "business" conducted from an "insured location" or engaged in by an "insured", whether or not the "business" is owned or operated by an "insured" or employs an "insured".

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Limit of Liability (Page 21 of 24)

• Our total liability under Coverage E for all damages resulting from any one "occurrence" will not be more than the Coverage E Limit Of Liability shown in the Declarations.

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Personal Injury Coverage (Aggregate Limit of Liability)

HO 24 10 05 11

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DEFINITIONS

"Personal injury" means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period:

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DEFINITIONS

4. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or5.Oral or written publication, in any manner, of material that violates a person's right of privacy.

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SECTION II—LIABILITY COVERAGESIf a claim is made or suit is brought against an "insured" for damages resulting from an offense, defined under "personal injury", to which this coverage applies, we will:1.Pay for the damages for which an "insured" is legally liable, subject to the Aggregate Limit Of Liability, as shown in the Schedule and described in Section II – Conditions, A. Aggregate Limit Of Liability. Damages include prejudgment interest awarded against an "insured"; and

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SECTION II—LIABILITY COVERAGES2.Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the Aggregate Limit Of Liability shown in the Schedule has been exhausted by payment of a judgment or settlement.

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Aggregate Limit Of Liability

A. Aggregate Limit Of LiabilityOur total liability in an annual policy period under Personal Injury Coverage for all damages resulting from the total of all offenses during the policy period will not be more than the Aggregate Limit Of Liability shown in the Schedule. This is the most we will pay regardless of the number of:1. "Insureds"; 2. Offenses; 3. Claims made; or 4. Suits brought.

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AAIS Approach—Different from ISO• 2006 AAIS amended their Personal Injury

Endorsement used with their Homeowners policy to specifically include:– Oral or written publication, including electronic

publication of material.– The endorsement goes on to exclude claims”

arising out of electronic chat rooms, bulletin boards, gripe sites, or other forums than an “insured” hosts, owns, or has the control or authority to update.

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AAIS Approach—Different from ISO• However, this exclusion does not apply

to “personal injury” arising out of content posted by an “insured” or provided by an “insured” for posting by others to a web site, weblog, blog, or other electronic forum.

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Summary• Cyber Risk and the Homeowners is a REALITY• Review: Homeowners Policy that

automatically include Personal Injury• Review: Homeowners Policies that do not

cover personal injury but add it by endorsement

• Review: If companies are “excluding” personal injury claims relating to the internet

• Review: Response from the Umbrellas

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Upcoming Classes

Upcoming University/Paid CE Classes

FREE to University Members$50.00/charge for non university members

10/24 Homeowners Problems and Solutions

10/31 Earthquake and DIC Coverage

11/7 Farm Auto

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Upcoming Community Classes FREE to University Members$25.00/charge for non university members

11/5 Cyber Bullying Assessment

Join the University TODAY. www.insurancecommunitycenter.comClick Join University at the top of the bar

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