Social Media Risks Abound for the Wealthy

ThinkAdvisor.com has a very insightful article, Unique Cyber Risks Your HNW Clients’ Kids Face, that examines how social media use among the children of affluent and ultra high-net worth parents, can lead to quite the cyber risk. It's a great reminder to check with your licensed personal insurance advisor to ensure you are completely covered.

For high-net-worth families, such risks are exacerbated by the fact that their wealth is a target. In some cases, affluent people also are public figures whose children can be easily tracked on Twitter, Instagram, Snapchat, Facebook and other online platforms. Even if your children are highly responsible, they may find themselves with others who are not.  

Cyberbullying can be as seemingly naive as 10-year-old Jimmy group-texting his pals that 10-year-old Maya is “ugly and stupid.” But if Jimmy continues to make such hurtful comments, and Maya physically harms herself because of them, his parents may be liable for defamation, not to mention Maya's emotional distress, sleeplessness, anxiety and worse. 

Many parents have no idea their child is texting, emailing or sending photographs deemed to be defamatory and libelous. They may be similarly shocked to learn their homeowners insurance may not cover the legal losses related to these activities. “Few homeowners policies address and absorb personal injury losses from libel and slander,” said Lucarelli. “If parents aren't vigilant, they can lose all their assets.”

Many insurers do not provide coverage protecting families from the financial costs related to cyberbullying, such as the settlement or verdict amount or the legal costs of defending the lawsuit. I definitely agree with the author. The amount of cyber risk the affluent and high-net worth individuals and families face is only going to grow. Back in June 2015, I wrote, Do You Need A Family Social Media Plan...

Not Everyone’s Social Media Risk is the Same

 For those in prominent positions or in professions considered high earning, it is exponentially more important to take steps to mitigate as much of the risk as possible. In today’s litigious society, paying to defend you or your family from a mere accusation could easily exhaust the limits of even a high-end homeowner’s policy. It is important to take a concrete look at how much risk you are willing to accept. An in-depth look at your assets, liabilities, and earnings potential provide a basis for calculating your risk potential.

How to Lower Your Family’s Social Media Risk 

In addition to mitigating your family’s social media risk, it is important to consider a cost-benefit analysis of proper insurance coverage. One of the most cost-effective ways to ensure you and your family are protected is through purchasing excess liability coverage. This type of coverage is most often referred to as a “personal umbrella.”

Before you decide to purchase any insurance policy, it is important to understand what you are buying. For a “personal umbrella,” it is important to understand that this type of coverage is secondary. This means it requires you having primary insurance such as a homeowners or renters policy. The reason it is called a “personal umbrella” is that it sits over your primary insurance policies.

Since it is supplemental, it works when the limits of the primary policy have been exhausted. For this reason, it is important to understand the relation between the limits on your primary insurance and excess liability coverage. The coverage on personal excess policies does not start until the underlying limit has been reached. In this instance, it is extremely important to match your primary policy limit to your umbrella limit, so no gap in coverage exists.

The coverage offered under personal excess liability policies varies. One important item to consider is whether or not the money for defense is included within the coverage limit or is separate.

Creating A Family Social Media Policy 

While insurance coverage is great, the best way to protect you and your family is to adopt a family social media policy. A family social media policy can include a number of items but most of all, you should look to establish what is ok to be shared and what type of information needs to remain private.

Personal Insurance Risks For Hosting Private Parties and Galas

Courtesy of AIG Private Client Group: 

  Whether hosting a birthday party or a charity gala, organizing a successful event requires looking beyond the festivities your guests will enjoy. To lessen the likelihood of accidents or injuries, incorporate the following steps into your planning process and don't forget checking your homeowner's insurance coverage.

Screen Your Vendors

• Obtain a signed contract documenting the function or service that the each vendor will provide.  
• Ensure via physical documentation to confirm that each vendor is licensed and bonded, if applicable. 
• Vendors must be insured (general liability, auto, workers compensation, etc.) with appropriate coverages depending on their service. 
• Make sure that vendors are adequately supervised. A responsible representative of each vendor should be on site at all times that their personnel are present. 
• Create written property rules/non-disclosure agreement (NDA) to be signed by vendors that identify expected behavior. For example, you may want to designate certain "no-go" areas on your property or prohibit photos. 

Why it matters: In the event of problems caused by your vendors (faulty lighting, food poisoning, a disruptive employee, etc.), you could be held responsible if underlying coverage is not in place.

Minimize slipping hazards

• Ensure that all walkways and stairs are clear of obstacles and in good condition. Immediately before the event, and during the event if necessary, walkways should be cleared of snow, ice, wet leaves, moss, or anything slippery. 
• Maintain adequate lighting in high traffic areas. Consider placing rugs or other covering on polished floors in order to prevent slipping. Remind guests to watch their step around staircases and other changes in surface elevation. 
• A staff member or sign can be posted in hazardous areas to alert guests of the elevation change. Why it matters: Slip and fall incidents can injure guests, disrupt the event and potentially lead to legal action against the homeowner. However, they often can be avoided if simple preventative measures are followed.

Be smart when serving alcohol

• Never serve alcohol to minors. 
• Designate or hire a responsible bartender to help monitor alcohol consumption, and instruct the bartender(s) to stop serving anyone who appears to have consumed too much. 
• Consider hiring a bartender who has a state Professional Server Certification/Bartender Certification Training. 
• Consider offering alternate transportation for guests. 
• Keep a lock on your wine cellar, and ensure that guests to do not have direct access to bottles. 
• If you are serving wine from your personal collection, ensure that bartending staff have clear instructions on what you want (and don’t want) poured. 

Why it matters: Laws vary widely, but in some but in some states a homeowner can be sued for “social host negligence” if an intoxicated guest leaves the event and causes an accident or injury.

Carefully consider activity choices

• Supply safety equipment, such as life jackets or bike helmets, if it’s required for an activity. If that is not feasible, instruct guests to bring their own equipment. 
• Have basic medical first-aid equipment on hand to treat minor injuries. Use professionals when it’s appropriate. For example, if the event involves swimming, have a certified lifeguard on duty. Even if your guests are very skilled, it is best to have a nonparticipant on hand to oversee the activity. 
• Ensure that activities are allowed by your local jurisdiction. Obtain the proper permits to avoid the risk of incurring fines or having the event shut down by local authorities. 

Why it matters: It’s an unfortunate fact that accidents happen. While many incidents can be prevented with proper safety protocols, those that can’t be avoided can lead to catastrophic injury as well as costly liability claims.

Make parking part of the plan

• Determine if any zoning restrictions are in place and obtain permits if required. If you plan to have guests park along the street, obtain permission from local government, your community association (if applicable) and neighbors. 
• For large events, consider offering valet parking or a remote lot with transportation to the event. 
• Ensure there is adequate lighting in the driveway and parking areas. 

Why it matters: A good parking experience can set the stage for a well-organized and enjoyable event. One host learned the hard way after many guests’ vehicles were towed, causing an unneeded disruption and thousands of dollars in towing and recovery fees.

Consider additional safety measures

• Be mindful of media exposure. It is wise to be aware of what photographs are taken of your home, how they will be used and where they might be distributed. 
• Block off any parts of your home that you consider private and not part of the party venue. Don’t assume that visitors will respect your privacy. 
• Securely lock up guns or other weapons that are in your home. Even objects on display should be secured if they will draw attention and can be accessed. 
• If not part of the entertainment, put away nuisance attractions such as dirt bikes, ATVs, skateboards or anything else that guests may be tempted to try without the necessary skills or experience. 
• Lock up valuables in a secure safe or consider temporarily moving them to a bank vault or other secure storage. Also consider moving fragile items (décor, artwork) out of high-traffic areas. 
• Implement and enforce a guest list to deter “party crashers” from attempting to blend in with invited guests for the purpose of causing trouble, free-loading or stealing personal property. 
• Unless they are specifically part of the entertainment, all pets should be separated from the event. Guests may be afraid of certain pets or suffer from allergies. All animals, regardless of how docile, can lash out unexpectedly if they feel threatened. 
• If small children are present, make sure that adequate staff is assigned to closely monitor them and all access points to lakes, pools, whirlpools or other water features. 

 Those with significant assets or earning potential would best be served by contacting Myrna Smith myrna.smith@willistowerswatson.com Willis Private Client