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Home insurers kick around cyberbully coverage

In recent years, a number of tragic cases have captured the public's attention in which teenagers committed suicide after being taunted, harassed or shamed, due to invasions of privacy on sites like Facebook, MySpace and YouTube.

If you have a teen or a college student who is fond of social networking, the rise of cyberbullying is enough to give you gray hair. But now there's another reason to fret over the rise of online intimidation: It could subject your family to expensive lawsuits. And incidents of cyberbullying may not be covered by your liability insurance.

Effective this fall, "cyberbullying" is an excluded offense under newly revised personal umbrella policy forms being filed nationwide by the American Association of Insurance Services (AAIS).

cyberbully insuranceAAIS is an advisory group that supplies standardized policy forms to more than 700 insurance companies nationwide. In most states, the forms will be effective Oct. 1, 2011. AAIS is introducing the exclusion in response to reports of suicides by teens who were victimized by cyberbullying.

"The reports of suicides indicate that 'electronic aggression' could result in bodily injury claims, in addition to personal injury claims," says AAIS spokesman Joe Harrington.

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AAIS uses the term "electronic aggression" because that's the term used by the Centers for Disease Control and Prevention to describe a new form of behavior linked to physical injury. The new AAIS Personal Umbrella base form specifies that Personal Umbrella Liability Coverage does not apply to bodily injury, personal injury, or property damage that arises out of electronic aggression.

High-tech harassment

Electronic aggression is defined by AAIS as "including but not limited to harassment or bullying committed by means of an electronic forum, including but not limited to a blog, an electronic bulletin board, an electronic chat room, a gripe site, a social networking site, a website, or a weblog; or by other electronic means, including but not limited to email, instant messaging, or text messaging."

Meanwhile, the Insurance Services Office (ISO), which also provides policy forms and endorsements to insurance companies nationwide, has taken a different approach than AAIS to the issue of cyber liability.

As of May 1st, ISO also addressed the issue of cyberbullying, even though the group didn't specifically use that language. Instead, ISO provided insurance companies with an optional home insurance endorsement that would provide customers with personal injury coverage within an aggregate limit.

The endorsement would "generally provide personal injury coverage to an insured with respect to personal injury arising from specified offenses including oral or written publication, in any manner, of material that slanders or libels a person, disparages a person's goods, products or services, or violates a person's right of privacy," says ISO spokeswoman Katie McFadzean.

ISO's approach was designed to provide insurers with "an additional means of underwriting personal injury coverage."

Cyber liability problems spread

The insurance industry has been monitoring the growth in cyber liability issues. For business insurance customers, the insurance industry has focused mainly on reducing online security breaches and guarding against mismanagement or theft of confidential data.

But for individuals, cyber liability incidents typically arise from the growing use of electronic communications, which allow for widespread, faster dissemination of potentially damaging online comments, according to Kevin Kalinich, national managing director of cyber liability in Aon's Chicago office.

"I think that parents now are waking up to the potential exposure of their kids being on Facebook and tweeting, but I don't think they understand the magnitude of the issue," Kalinich says.

In years past, incidents of offline taunting were witnessed, at most, by a school full of kids. But hurtful comments made about someone on Facebook or a mean-spirited YouTube video can now quickly go viral to thousands or even millions of people, raising the risk of individuals claiming to be injured by such information.

Kalinich says Internet-related defamation, libel, slander and invasion of privacy claims are all among the thorny legal issues now confronting insurers, policyholders and courts.

Umbrella coverage

Personal injury is not covered under standard home insurance policies. Usually, you can buy this coverage by adding an endorsement to your home insurance or buying a personal umbrella policy. Both options, of course, add to your home insurance rates. But many endorsements, as well as most umbrella policies, won’t drive up your home insurance quotes by an exorbitant amount.

The Insurance Information Institute (III) reports that you can buy a $1 million umbrella policy for about $150 to $300 annually.

How much insurers might charge to cover cyberbullying isn't yet known. If you want this coverage, it will pay to shop for the best home insurance rates.

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