Alerts3.25.26
Insurance Coverage for Emerging AI and Social Media Liabilities
Highlights
- The Delaware Superior Court denied Meta insurance coverage for the defense of thousands of social media addiction lawsuits, finding that Meta’s intentional platform design choices precluded the alleged harms from qualifying as an “accident” under its Commercial General Liability (CGL) policies.
- The Delaware court’s conclusion raises significant issues for software companies, because CGL policies typically cover the types of damages alleged against Meta and other policy types are often structured to avoid coverage otherwise provided by CGL policies.
- Specialty AI insurance policies are beginning to emerge to fill these gaps, but companies deploying AI agents should not wait for the market to mature — a proactive review of existing coverage is essential now.
The Delaware Superior Court, applying California law, recently denied Meta insurance coverage for the defense of thousands of lawsuits alleging that Meta designed its Facebook and Instagram platforms to maximize engagement by exploiting psychological vulnerabilities, embedding addictive features, and intentionally targeting minors. The lawsuits were brought by two classes of plaintiffs: (i) Individuals who seek recovery for the harms children exposed to the platforms allegedly experienced, including addiction, depression, and self-harm; and (ii) school districts and state actors who seek recovery for the resources they expended to respond to the youth mental health crisis that allegedly arose out of children’s exposure to Meta’s platforms.
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