Hunton Insurance Recovery Blog

As social media continues to grow, businesses have turned to different platforms to promote their products. This advertising strategy can have unintended consequences, including copyright infringement claims, if businesses fail to take certain steps when sharing photos and videos to promote their product.

For example, many multinational music companies have filed lawsuits against brands for copyright infringement. Given the frequency of these claims, businesses may think that infringement and similar intellectual property claims are covered by their liability insurance policies. But that is not always the case.

The most common source of coverage is “Coverage B” in commercial general liability policies, which protects against claims alleging personal and advertising injury. Those claims can include allegations of libel, slander, invasion of privacy, copyright infringement, false arrest, and wrongful eviction. All policies are not created equal, however, and references to advertising or intellectual property rights may not actually lead to coverage for social media missteps involving alleged infringement. As a result, it is important for an insured to understand the coverage afforded under their CGL policies and additional coverage options that may provide broader coverage.

There are several common limitations on coverage that may come into play for claims involving social media.

Human beings are social creatures. In today’s world, social media platforms are ever-growing and there are more users than ever before. But, at what cost? The use of social media has consequences. Policyholders should look to their CGL insurers for defense coverage, under Coverage A or Coverage B.

A Washington state court in The Board of Regents of the University of Washington v. Employers Insurance Company of Wausau, No. 22-2-15472-1, recently held that the University of Washington has made a plausible claim for coverage for losses sustained as the result of the outbreak of the COVID-19 pandemic under Washington’s “loss of functionality” test.

A Michigan federal court in Wolverine World Wide Inc. v. The American Insurance Co. et al., No. 1:19-cv-00010 (W.D. Mich.), recently confirmed what should go without saying – a claim handler is a claim handler, even if they may also be a lawyer.  Recognizing that it’s the nature of the work that drives the analysis, the court ordered an in-house Travelers’ attorney to sit for a deposition in a PFAS coverage suit because the attorney was performing ordinary claim-handling activity.  In rejecting the insurer’s arguments, the court reiterated that “an insurer cannot create a ‘shroud of secrecy’ by simply designating an attorney to conduct an otherwise ordinary claim investigation.”