Advisors should educate their clients and their children on the risks of online activity.

We love our smartphones and the unencumbered access to social media they provide. However, our negligent use of these technologies can inadvertently lead to lawsuits for libel, defamation, slander and cyberbullying.

Many parents are unaware of the online hazards they and their children confront. Personal litigation for children bullying other children is on an upswing, as are cases involving students writing defamatory comments about teachers and each other. Parents are suing other parents and the school, and schools are suing parents.

According to the National Human Trafficking Resource Center, online recruiting is the third most productive method for luring young women and girls into prostitution. “These are the kinds of exposures that people don’t like to think about, yet parents must intervene to have serious discussions with their children about what they’re doing on social media,” noted Kim Lucarelli, senior vice president and director of sales at insurance broker Oswald Companies.

Lucarelli earned the Certified Advisor in Personal Insurance (CAPI) certification offered to Chubb’s partners through The Wharton School. To earn the CAPI designation, brokers and agents are charged with developing a Capstone project; Lucarelli’s project focused on the risks related to social media aggression.

“What I learned more than anything is that threat awareness is an absolute necessity,” Lucarelli said. “Parents need to research some of these newer apps like Kik, WhatsApp, ooVoo and Ask.fm. Then they need to ask their children whether or not they’re using them. If they are, talk to them about the risks. There are some really horrific stories out there.”

I did my research, typing in the names of these online platforms one at a time in Google, accompanied by the word “dangerous,” as Lucarelli instructed. I was numbed by what I read. With regard to chatting with children about the risks, I would suggest that parents visit popular social media sites and explore for themselves what their children are doing to help ensure they are using them appropriately.

Cyberbullies

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.

Many people make comments online that they wouldn’t in a more traditional public forum. Perhaps this is because the hundreds or thousands of people “friended” on Facebook seem distant — less there, so to speak. But write something harsher than honest criticism and a nasty libel or slander lawsuit is possible.

If adults can make inadvertent mistakes, imagine the legal landmines for children. “Cyberbullying is huge,” Lucarelli said. “Not only do parents sue the parents of the child who said horrible things about their daughter or son online, but then these parents sue the school for not policing the activity, assuming the cyberbullying occurred at school or during school hours.”

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.

For those who are victims of cyberbullying, the emotional toll can be even worse. Unfortunately, few carriers provide compensation for bullied victims’ psychiatric services, rest and recuperation expenses, lost salary and temporary relocation services.

— Read “Advisor-Investor Survey Reveals Top Concerns, Priorities” on ThinkAdvisor.