Tweet insurance coverage in the works
But unlike drivers caught in a car wreck, users behind careless tweets or nasty Facebook postings haven't traditionally had any kind of insurance to bail them out.
They soon might.
Malcolm Randles, who issues cyber insurance policies for Kiln, a subsidiary of Lloyd's of London, said brokers in Canada are keeping a keen eye on social media trends and are beginning to develop coverage for the consequences of unruly posts.
"We're sort of feeling our way through, trying to work (it) out," Randles said.
"It's very new in Canada. Brokers have caught on to what their colleagues are doing in the U.S. and have been very strong in promoting this class of business."
As employers increasingly use sites such as Facebook and Twitter to market products, communicate with customers and collect information, they leave themselves open to regulatory, legal and reputational risks.
And where there's risk, there's the insurance sector.
With the use of social media in the corporate world comes the potential for lawsuits regarding privacy issues, intellectual property infringement, and defamation.
The liability risk stems from the fact that many companies don't appear to be establishing clear, written policies for social networking, said Eric Dolden, a Vancouver-based insurance lawyer with Dolden Wallace Folick LLP.
" 'My boss is a big fat cow,' is a very common tweet," he said. "But people often stupidly then say where they work and who their boss is in the tweet."
The legal ramifications can hurt both the finances and reputation of a business.
"We've seen people, in their personal capacities — the 'big-fat-cow boss' bringing a lawsuit against the individual," said Dolden. "And we've also seen the company have to take action because, from a reputational point of view, their brand is now suddenly gone viral, negatively."
It's something a number of celebrities have found out the hard way.
Fashion designer Kenneth Cole sparked public outrage after tweeting during the unrest in Egypt: "Millions are in an uproar in Cairo. Rumour is they heard our new spring collection is now available online."
The tweet linked to the collection but was removed about five hours later, following a Facebook apology from the designer.
"I apologize to everyone who was offended by my insensitive tweet about the situation in Egypt," the post read. "I've dedicated my life to raising awareness about serious social issues, and in hindsight, my attempt at humour regarding a nation liberating themselves against oppression was poorly timed and absolutely inappropriate."
Despite another apology via Twitter, members of the public had already weighed in on the offending tweet.
"Wardrobe got you water-BORED? GITMO of our new spring collection," read one deliberately offensive tweet, while another said, "Rolling through Germany? Gestapo by our new Berlin store!"
American rock singer Courtney Love had to fork over nearly half-a-million dollars for slamming a Texan fashion designer in 2009 to her 40,000 followers. Love also posted comments about the designer on her Myspace blog.
The designer filed a lawsuit claiming Love failed to pay up for five outfits the designer had sent the singer and that the posts destroyed her reputation and brand, though Love defended her actions, claiming the fashionista's sales had gone up as a result of her rants.
Dolden said for now the demand for social media insurance coverage is mostly for corporations.
But while traditional insurance can apply to social media exposures, most policies were designed before the advent of such technology and therefore have limitations.
Dolden said premium prices to cover the use of social media are all over the map, depending on the size of company. He said large companies could pay about $100,000 for a $10-million policy that protects against data loss and liability, though small companies would pay much less.
Personal insurance 'five years out'
Dolden said it's only a matter of time before firms offer personal insurance lines for those using social media, much like automobile insurance for drivers.
"I think eventually it's going to come for individuals," Dolden said. "It's probably about five years out."
"As the world increasingly turns to those modes of communication, instead of more traditional modes, I think it will invariably come."
But just because a company or individual wants to buy such coverage, that doesn't mean an insurer will be willing to sell it to them.
Randles said brokers won't necessarily cover everyone.
"If you turned up with your pocket full of cash and said to me, 'I know absolutely nothing about social media. We've launched a new site. I'm really worried,' I'm not going to take your money," he said.
"If you turn around and said to me: 'We've got three lawyers involved, we review every comment before it's posted, and everything that's written is put in a holding pen until we've checked it, and then we only upload it once we feel that it's kosher,' — (that's a) very different argument."
Randles said to avoid the legal ramifications of unruly tweets and internet postings, companies should review all employee and public comments prior to posting them, as opposed to allowing them to be broadcast instantly.