The risks of social media

Does your company have an international brand and a worldwide marketing campaign? Well, if you have any sort of social media presence, you do. That means Facebook and Twitter as well as company and employee blogs. This online presence can bring more customers for your company's products, but it also can increase the likelihood of liability.

Facebook has established itself as one of the more popular Internet outposts for companies. It is simple and cheap to set up a page and many companies have attracted thousands and even millions of fans. Starbucks has over 10 million fans and brands like Coca-Cola and Skittles are not far behind. But these sites also attract unofficial pages – not all of which are positive. For example, there are hundreds of “I hate Starbucks” sites, according to a report from the law firm ReedSmith. Even on company-controlled Facebook pages, there are often negative and potentially offensive comments from users that the company has a limited ability to control. Some airlines have found this out the hard way as photos and comments from delayed customers were posted while they were stranded in airports and on aircraft.

There are many potential risks beyond simple embarrassment for companies who choose to enter the sometimes unpredictable world of social media. The most obvious problem is defamation. In the United States, companies enjoy fairly robust First Amendment protections. However, places like England – where many companies are unwittingly publishing – have drastically less protective laws.

Copyright, trademark and other intellectual property issues often arise on social media sites. This can include the unauthorized use of your company's logos and brands as well as the use of other company's protected intellectual property on your pages. There also can be problems with breaches of data privacy. These data privacy laws can vary greatly by country. In the United States, there also are issues associated with the issuance of securities. American securities laws strictly govern the kind of information that companies can release and when they can release it. A Twitter post is just as likely to get a company in trouble as a traditional press release will.

Rather than giving up completely on the opportunities provided by services like Facebook and Twitter, companies simply need to be aware of the risks and prepare for them. This includes having company-wide policies in place to deal with the risks and a system for vetting posts and monitoring third-party content. Companies should also review their insurance coverage. Some existing coverage, such as advertising injury and directors and officers liability insurance, might already cover some of these risks. However, you should check with your insurance representative to see if you are adequately covered.

 

Sinking feeling

It's a frightening possibility: The earth opens up and swallows your home or businesses. But it happens all the time and without the proper coverage, sinkholes can destroy a thriving business.

Sinkholes are caused by a sudden collapse of underground caverns. These caverns are created by groundwater, which dissolves underground rock forming empty spaces. When these empty spaces grow too large, the weight of the ground above them can cause these caverns to suddenly collapse. Sinkholes are sometimes several hundred feet across and if a road or structure is directly above one of these collapsing caverns, it is likely to be destroyed.

Sinkholes tend to be most common and destructive in Florida, Texas, Alabama, Missouri, Kentucky, Tennessee, and Pennsylvania, according to the U.S. Geological Survey. These states are especially susceptible to sinkholes because the rock beneath them readily dissolves in water. Human behavior can  cause sinkholes. Groundwater pumping, construction and water divertment can all lead to the sudden formation of a sinkhole. The USGS also says that the weight of industrial ponds on the surface can sometimes lead to sinkholes. Drought can also raise the danger of sinkhole formation.

Typically, there are two types of sinkhole coverage. The first is standard sinkhole coverage. Standard coverage will generally pay for fixes to the structure and ground stabilization. The second type is catastrophic ground cover collapse coverage. This coverage generally only compensates home and business owners in the event that the insured structure is condemned. Because of the rarity of condemnation, however, this catastrophic coverage is less likely to provide adequate protection. It is important that you talk to your insurance representative about sinkhole coverage if you have questions or concerns.

 

Hope for long-term flood coverage fix

Congress has once again temporarily extended the National Flood Insurance program, but this time there is hope that the extension will be followed by a more permanent solution. For months, Congress has been extending the program for a few weeks, letting it expire and renewing it again. During those lapses homeowners and businesses were unable to buy new policies or renew existing policies.

The program has been extended until the end of September and the House also has passed a five-year extension and modification of the program. The Senate must still pass the five-year extension and the president must sign it.

The National Flood Insurance Program provides flood insurance to 20,000 communities that participate in federal floodplain management. For many, this is the only flood insurance available. Other forms of insurance routinely exclude flood damage claims from their coverage. The program has been in severe financial difficulties since Hurricane Katrina hit the gulf coast in 2005. Damage from the hurricane cost the program billions of dollars and its future has been in doubt since then.

The five-year extension would allow for increases in premiums and deductibles. It would also remove subsidies now in place on vacation homes, unoccupied properties and structures in extremely high-risk areas. Wind coverage was not added to the program, as some had hoped.

“The House has taken the right step forward for homeowners and the American economy by crafting a strong, comprehensive extension of the National Flood Insurance Program,” said Ben McKay, senior vice president for the Property Casualty Insurers Association of America. “This action helps provide a greater degree of certainty for property owners and a real estate market that was left vulnerable by previous lapses in the government program.”

 

Protection from contractor injuries

Businesses that hire independent contractors got some good news from the California Supreme Court recently. The court ruled that those who hire independent contractors cannot be held vicariously liable for the injuries to those independent contractors.

“Unlike a mere employee, an independent contractor, by virtue of the contract, has authority to determine the manner in which inherently dangerous construction work is to be performed, and thus assumes legal responsibility for carrying out the contracted work, including the taking of workplace safety precautions,” the court wrote in its unanimous opinion.

The construction industry is most directly affected by this case. This case itself involved a building project with several layers of contractors and subcontractors. One of those subcontractors sued the general contractor after he fell into a hole on the work site.

The court's ruling expands on protections already in place for those who hire contractors. The court previously ruled that those who hire independent contractors cannot be held liable for injuries to the employees of independent contractors. This ruling extends that protection to injuries to the contractors themselves.

 

Storm season looks grim

The Atlantic hurricane season has already started and experts are predicting the most damaging season in years. Hurricane Alex hit Mexico as a Category 2 hurricane on June 30 and forecasters are predicting it will be one of 18 named storms this year, 10 of which will be hurricanes.

Colorado State University's Meteorology Project is now predicting a “well above-average” probability of a major hurricane making landfall in the United States. The group's June 2 forecast anticipates more storms than the project's earlier forecasts. The National Oceanic and Atmospheric Association is also predicting a very active hurricane season.

And it's not just Florida and the gulf coast that should be on alert. Weather Service International is predicting that the area between North Carolina and Maine is twice as likely to be hit by a hurricane this year than in an average year. “Our model suggests that the threat to the Northeast coast this season is on par with that in Florida and the Gulf coastal states,” said WSI Chief Meteorologist Dr. Todd Crawford.

 

Cell phone science in the spotlight

The issue of whether there is a link between cancer and cell phones has gotten more attention in recent weeks. San Francisco recently became the first city in the country to require phone retailers to post warnings about the potential dangers in their stores.

Despite the new law, however, there is no real consensus in the scientific community about whether phones actually increase the risk of cancer for their users. A long-term study of cell phone users issued in May by the Wold Health Organization found no increase in cancer among users. However, the study cautioned that there were “suggestions” that there could be an increase among particularly heavy cell phone users and advised that more study was needed on the issue. Scientists involved in the study pointed out that cell phone use has changed dramatically since the study was started in 2000. Many users no longer make a lot of phone calls and instead use their phones for texting, music and Internet browsing.

While there is no real potential for problems at the moment, employers should be monitoring the issue. This is true not only for retailers who deal in cell phones but also those who issue them to their employees.

 

Business Briefs: Mega-quake report

The 8.8 magnitude earthquake earlier this year in Chile was the seventh-largest trembler ever recorded and a report from Aon Benfield says it might not be the last. The report says that most mega-earthquakes occur in subduction zones – places where part of the Earth's surface slides beneath another part of the Earth's surface. The report identifies several areas on the planet that are prone to these large quakes, including one in the continental united states. The Cascadia Subduction Zone stretches from Northern California into Canada. The report says that the last major earthquake in the area occurred in January 1700 and is estimated to have been a 9.0 magnitude quake.

Business Briefs: State of state insurance programs

Six of the ten state catastrophic insurance programs reviewed by the Government Accountability Office do not adequately reflect the risk of loss. This underpricing is potentially discouraging private market involvement, according to the GAO. In some states this is by design, as the states are trying to encourage broad use of the programs. Other states see their programs as insurance of last resort and encourage citizens to get insurance from the private sector. The review of state programs also found that most had grown since 2005 – some substantially so. Mississippi led the way with 495 percent growth. The study also found that Florida's program had far more exposure to loss than any other state. Florida's insurance and reinsurance programs had a combined $2 trillion in exposure.

Business Briefs: Fewer uninsured Texas drivers

A Texas program that aims to encourage drivers to buy auto insurance seems to be paying off, according to figures from the Texas Department of Insurance. In the last two years, the state has reduced the number of uninsured cars on the road by more than 10 percent. The program matches car registration with car insurance, making it easier for the state to track those without coverage. Driving without insurance in Texas is illegal. First-time offenders can be fined $350 and repeat offenders can have their licenses suspended. Uninsured drivers can be a big problem as they are often unable to pay for damage caused in accidents. Insured drivers can purchase uninsured motorist coverage as a way to protect themselves from this risk. Ask your insurance representative if you have any questions about this coverage.