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AAIS Perspective Personal injury Growth in exposure prompts change in coverage provision By Joseph S. Harrington, CPCU AAIS Are your homeowners clients concerned about their exposure to personal injury claims? They should be, especially if they have adolescent children. Up until 10 or 15 years ago, chances were remote that a household would be sued for libel, slander, invasion of privacy, or some other offense. Unless they were picked up in a publication, damaging comments tended to remain within small circles of people and faded away soon after they were uttered. In the Internet age, however, the potential for personal injury claims has increased substantially. Thanks to the global reach of e-mail, blogs, and shared sites such as MySpace and YouTube, damaging comments can be instantly transmitted to millions of people throughout the world and live on, so to speak, in electronic files that may never be fully expunged. The growth in personal electronic communications is staggering. According to an August 2006 report by General Reinsurance Corporation, an estimated 57% of American teens had posted material on the Internet; and more than 53 million American adults had created online content. Those figures do not include the text and photos shared in supposedly private e-mails. As a result of this communications revolution, households and personal lines insurers are seeing personal injury suits filed by individuals who have been ridiculed in electronic communications or had embarrassing information or photos of themselves posted online. Businesses are also taking legal action against “gripe sites” and individuals who post disparaging comments about their products and services online. “The concern [today] is that the trickle of claim activity may become a torrent, as Internet usage continues its sharp growth among younger, and perhaps less worldly, insureds,” reads the Gen Re report. AAIS response The American Association of Insurance Services (AAIS) has responded to the transformation in personal injury exposure by introducing new policy language for personal injury coverage. AAIS is a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty companies throughout the United States. Several states have already approved a comprehensive revision of the AAIS Homeowners forms, due to take effect in some states on July 1, 2007. Among other things, the revision introduces several changes in wording in the optional endorsement for providing personal injury coverage. First, the definition of “personal injury” is modified to explicitly include injury that arises from electronic publication of material that slanders or libels a person or organization, disparages the products or services of a person or organization, or violates another’s right to privacy. With coverage for electronic publication established, the revised AAIS endorsement then clarifies the extent of coverage for electronic publication by implementing a new exclusion that includes a key exception. This new provision generally excludes coverage for personal injury arising from “chat rooms,” “bulletin boards,” “gripe sites,” and other electronic forums that an insured hosts or controls. However, it contains an exception that preserves coverage for personal injury arising from content posted or provided by an insured. Thus, in a general sense, the exclusion and exception are crafted to preserve coverage for an insured’s own comments, but not for his or her potential liabilities as a publisher of the comments and ideas of others. Exposure In today’s world, one’s liability for personal injury does not necessarily end after a libelous, slanderous, or compromising comment is transmitted for the first time. A key characteristic of modern electronic communications is that the person initiating a communication usually loses control of it once it is released into cyberspace. No one can completely prevent others from forwarding malicious e-mails, or from copying malicious Web content and passing it along, even if the original is “taken down.” This characteristic of electronic communications is raising legal questions that are now being weighed in the courts. When does publication happen? Is existing content on a blog re-published anew—and, thus, potentially a new offense—every time the blog is updated with additional new content? What is the extent of liability for the originator of injurious content when others link to it, or when it finds its way into search engines? Answers to these and similar questions will have to wait for the courts, legislatures, and Congress to establish definitive law governing personal injury in electronic communications. Even then, the extent of damages in individual cases will vary on a case-by-case basis. At this point, AAIS has modified the “How Much We Pay” provision in its revised Homeowners Personal Injury endorsement to protect carriers from potentially having to pay policy limits multiple times for offenses to the same person or organization. The new AAIS Personal Injury endorsement states that the personal injury limit is the most the carrier will pay for all personal injury to any one person or organization, regardless of the number of claims brought or the number of offenses committed during the policy period. This language protects the carrier from being exposed to paying coverage limits multiple times for personal injury offenses claimed by the same party. With the new AAIS Personal Injury endorsement, coverage for personal injury arising from electronic communications is more clearly defined than in the past. Note: This article is general in nature and is not intended to provide definitive information regarding use of AAIS products and services, which is restricted by copyright and license agreements. This article in no way alters, supplants, or supersedes what is written in AAIS policy forms, manuals, bulletins, or other communications and does not indicate any official AAIS position on the matters discussed in the article. * The author |
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