Bricks and Mortar Coverage for a Digital World: Recent Trends and the Insurance Coverage Implications of Internet, Technology, and Social Media

The insurance world is, as many practitioners already know, shaped and molded by the development of both new business practices and new technologies.   The growth of emerging industries often comes accompanied by new risks and liabilities, which in turn give rise to new insurance products and eventually, insurance coverage litigation.   The loop becomes complete when new insurance products and coverage cause businesses to change their practices.

Over the last decade or so, the Internet has caused a complete transformation in business practices – transcending the boundaries of time, space, and location and hurling businesses out of their bricks and mortar offices into cyberspace at light speed. In the last two to three years, there has been a further explosion in the digital world through the development and viral growth of social networking and social media technologies, even further altering how companies do business, both in business-to-consumer and business-to-business capacities.  This growth was predictably accompanied by countless accusations of liability.  In 2009 and 2010, hundreds if not thousands of demand letters, investigations, lawsuits, and other legal proceedings were brought in connection with online and Internet activities of disgruntled customers, faithless or departing employees, anonymous bloggers, crafty competitors, and even ex-spouses.

The growth of social media and social networking has similarly impacted the insurance industry.  Not only have new practice industries for legal and insurance professionals emerged, but more interestingly, they have appeared on an unchartered landscape.

This article explores and reports on the insurance coverage implications of Internet technology and social media, and assesses their ramifications, both retrospectively to address issues and disputes already known to exist and prospectively to address the salient topics that may prove problematic.   First, an extensive primer on the evolution of social media technologies will be provided.  From there, specific trends that have arisen in the landscape of social networking and media law in the last year are identified, accompanied by a discussion of the applicable insurance coverage implications. Ultimately, this article aims to assess whether traditional insurance coverage providing protection to "bricks and mortar" businesses can ever capture and address the new risks posed by the digital age, which has not only changed how new business risks are covered by insurance, but more fundamentally, how businesses do business.

Download the entire article, Bricks and Mortar Coverage for a Digital World: Recent Trends and the Insurance Coverage Implications of Internet, Technology, and Social Media, by Rabeh Soofi.

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