ELITE ADVISOR BEST PRACTICES
The Perils of “Generation Text”
Insights to help high-net-worth families manage social media risk
By Peter Piotrowski
- Parents can be held legally responsible for the acts of their minor children.
- Encourage clients to talk to their kids, particularly teens, about how to conduct themselves online.
- Wealth can make your clients targets for personal liability litigation.
- The best way to protect one’s assets and reputation is to obtain adequate excess liability insurance via an independent insurance advisor.
When used responsibly, today’s technology is a vital and relevant communication tool. However, the freedom and access it provides also come with increased risk. This risk is exponentially greater when the power to communicate globally and instantly is in the hands of those who don’t possess the maturity to comprehend fully the consequences of their actions.
In addition to incidents of identity theft, security breaches and threats to personal safety, social media is quickly becoming a breeding ground for liability litigation. Messages, images and videos can go “viral” at a moment’s notice, and once something is posted it can’t be taken back.
Although social media is now widely used across generations, teenagers are particularly common culprits of its misuse. An entire generation that grew up on texting and social media is keen to share their experiences in a worldwide, public forum. In fact, in many instances the damage is done unwittingly. Consider this recent, real-life example.
A Florida teenager posted comments on Facebook about a legal settlement between her father and her father’s former employer. The seemingly innocent post indicated that the settlement money would be used to pay for a family vacation. However, the reference violated the settlement agreement and cost the family $80,000.
By recognizing the subtle-yet-prevalent circumstances that expose families to unnecessary risk, you can help your clients become better attuned to potential risk and to collectively take action to preserve their hard-earned wealth.
Understanding Parental Liability
Parents can be sued when the actions of their minor children cause harm to others. There are many stories reporting on teens bullying peers, posting embarrassing or disparaging photos of classmates or teachers, and posting inappropriate comments.
Victims have sued minors and their parents for defamation of character and libel, and a common theme among the allegations is that the parents “knew” or “should have known” what their minor children were doing. In one recent lawsuit, the parents of a minor blogger were sued for negligent supervision for allowing their kids to use a “dangerous instrument”—a smartphone.
Lawsuits involving social media can be expensive and invasive. The defendant’s email and text accounts are discoverable and may have to be produced. Each member of the household (parents and siblings) may receive subpoenas to produce emails, instant messages and texts.
Advice for families
What are parents to do, and how can parents protect themselves in the digital era? It may sound a bit ironic, but communication is the first and most important step. Parents need to start an ongoing dialogue with their children and to establish some basic rules on what is acceptable online behavior. A few examples:
- Don’t curse or use profane language.
- Don’t post inappropriate images of friends, family, yourself or anyone else.
- Keep private matters private.
- Don’t text while driving, and don’t text friends while they’re behind the wheel.
- Don’t post or repost insults.
- Don’t post or repost embarrassing comments or images.
- Don’t bully others.
- Don’t engage strangers.
- Think twice before posting something.
Parents also should consider being up front with their kids about having the ability to monitor their online activity.
The importance of ample coverage
While social media liability impacts everyone in today’s digital world, your high-net-worth clients can be especially prime targets for lawsuits due to their perceived deep pockets.
The liability coverage included within your clients’ homeowners, auto and watercraft policies is considered primary insurance; it responds first in the event of a claim. Excess liability, or “umbrella,” insurance responds after primary coverage limits are exceeded. For example, the liability limit on many homeowners’ policies is $300,000. If someone is injured on your property and awarded damages above that, you’re personally responsible for the remaining balance, including legal fees.
Most mainstream insurance carriers sell umbrella policies with limits that may not measure up to the net worth of your wealthy clients; typically they’re capped at $5 million in coverage. In such instances, it is advantageous to seek out an independent insurance agent who can offer access to more fitting coverage solutions. Carriers that specialize in high-net-worth personal lines insurance provide policies with much higher limits, along with protection that is more tailored to the client’s lifestyle. For example, coverage may address exposures stemming from:
- Owning exotic cars, powerful boats, homes with pools, firearms or other items that pose inherent danger
- Sitting on not-for-profit boards, where underlying liability coverage may be minimal
- Entertaining at home, increasing the chance of injuries on the property
Technology is evolving at a remarkable pace. While the legal landscape will take some time to catch up, parents need to take action now to make sure that their kids are not exposing the family to liability due to the kids’ social media usage. It takes only a single post or inappropriate comment to create a financial nightmare, one that can jeopardize all aspects of a family’s net worth. But proactive risk management can help everyone rest easier.