Hunton Insurance Recovery Blog

Hunton Andrews Kurth’s 300-lawyer cross-disciplinary Retail Industry Team has released its annual 2023 Retail Industry Year in Review. The Review discusses retail industry issues that implicate multiple legal practice areas and highlights new and emerging risks retailers may encounter in the year ahead.

Significant issues from 2023, with insurance implications that will continue to evolve in 2024 and beyond, include copyright infringement claims for retailers engaged in social media and polyfluoroalkyl substances (PFAS) related liability claims and related putative class action lawsuits.

We discuss these risks in the 2023 Retail Industry Year in Review and on our insurance recovery blog, along with other risks that will continue to affect the retail industry in 2024.

Social Media Exposure for Retailers

As retailers increase their utilization of social media and generative AI as a means of advertising, it is critically important that retailers understand how those media platforms and technologies intersect with copyright law and permissible use. Nowadays, creating, enhancing, and re-sharing photos, videos, music, or other media without the creator’s permission can expose retailers to significant liability. This can occur even if the content is utilized innocently as a background effect. Even crediting the original creator does not afford automatic protection.

While there is not an all-encompassing solution to these types of risks, insurance can mitigate the associated risks and consequences. For instance, insurance can help lessen or eliminate out-of-pocket loss should a copyright violation occur. In addition, insurance can help reduce or completely cover the cost of defending claims of copyright infringement. From media liability to commercial general liability (CGL) to cyber insurance, retailers can leverage insurance for defense costs, judgments, or settlements related to copyright infringement claims.

PFAS Risks for Retailers

While much of the focus of PFAS claims has been environmental, arising from alleged contamination of drinking water, there has also been an increase in claims related to PFAS in consumer products. These claims have ranged across a variety of consumer products, including food and beverages, food packaging, cosmetics, personal hygiene and care products, and clothing. These claims relate to false advertising (i.e. “all natural”), thus violating the state consumer protection statutes.

As discussed in our blog, insurance may be available to cover claims made by a company’s customers and consumers for resulting bodily injury and property damages relating to PFAS. For example, general, excess, and product liability policies should cover the cost of defending PFAS claims since defense cost coverage is typically broadly triggered when there is merely a potential for coverage. In addition, there may also be coverage for PFAS claims under other kinds of insurance in a company’s insurance program, including pollution legal liability policies, and policies protecting the company as an additional insured. And, if liability rises to the decision-making of executives, management liability and D&O policies may also be implicated. Other types of coverage may also be implicated.

Retailers should look closely at their insurance policies, indemnity agreements, and, in many instances, insurance held by others, to ensure there is coverage for these types of risks or speak with an insurance professional about updating language in their policies to include adequate coverage.