Hunton Insurance Recovery Blog

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.

Coverage A Implications: Social Media Is Hurting Our Children

In February 2024, several plaintiffs filed suit against, among others, Meta, Facebook, Instagram, TikTok and YouTube, alleging that the social media companies design and market their platforms toward children, which has led to an epidemic of social media addiction.

Plaintiffs, the City of New York, the City School District of the City of New York and New York City Health and Hospitals Corporation each allege that New York City, and other cities, are battling an “unprecedented mental health crisis among its youth,” which has been “fueled by Defendants’ creation and promotion of addictive and dangerous social media platforms.”

The City of New York lawsuit, and others like it, present new questions under CGL policies about whether or not those injuries will be a covered injury under Coverage A. Typically, Coverage A insures claims for bodily injury caused by an occurrence. Some CGL policies define “bodily injury” to include mental injury or emotional distress, while other policies do not. However, this may be a distinction without a difference depending on the allegations. Some courts have held that a mental injury, accompanied by physical manifestation, qualifies as “bodily injury.” Physical manifestations have included weight loss, hair loss, fragile fingernails, loss of sleep, headaches, stomach pains and muscle aches. If social media users can show that they suffered from any physical manifestation, it may be a covered claim for bodily injury.

On the other hand, courts are divided on whether lawsuits brought by governments, that have incurred additional expenses, satisfy the “because of” bodily injury requirement. As a result, cases such as the City of New York may present additional coverage concerns as the users of social media did not bring the claim.

Coverage B Implications: Social Media, Influencers and Advertising

Although it is less common, in the emerging world of social media, policyholders should also be aware of Coverage B under CGL policies. Lawsuits involving social media also present new questions about the potential risk facing influencers and companies who use social media for advertising, which will trigger Coverage B under CGL policies.

Coverage B of a CGL policy typically insures claims for several specific personal injury and advertising injury torts. For example, Coverage B may include a duty to defend and indemnify against offenses like infringing upon another’s copyright. In a world where “influencers” are becoming more common, companies must consider the risks of an influencer advertising its product.

Under a traditional advertising campaign, a company has more control to ensure that the company is not engaged in acts that constitute covered offenses under Coverage B. However, the company loses certain elements of control by utilizing influencers for its advertising because influencer posts often do not go through the same rights clearance process as traditional advertisements.

A company may face direct liability as a result. For example, in 2022, Bang Energy, an energy drink and sports nutrition supplement company, which is now bankrupt, was held liable for copyright infringement in a lawsuit filed by Sony Music Entertainment because its influencers had used over 200 recordings in paid social media posts of Sony’s copyrighted works.

Conclusion

With over 5 billion social media users in the world, the chance of claims arising out of its use continues to grow. As a result, it is important for policyholders to be aware of their coverage and its reach, under both Coverage A and Coverage B.