Illegal or criminal acts are not covered under the personal liability section of an insurance policy. Therefore, review your actions and the law to determine if you are willing to take on the risk of such actions.
Abstract: The chances are good that someone in your household is downloading music or other types of files
from iTunes or other online services. It is also possible that someone is using a file sharing program to download
files illegally. Are the increasing numbers of lawsuits against consumers covered by a homeowners policy?
Remember the days of curling up to the radio on a Saturday night, torturing yourself through commercials and
lame tunes just to be able to crank it when Mr. DJ played your favorite song?
No longer does one require the patience to spend an entire evening anticipating the next round of “Love Me
Tender” or the BOC’s “Godzilla.” File-sharing programs make an instant world faster—obtaining music and video
clips with a click. Popular versions like iTunes legitimize the process through pages of service agreements and
per-transfer fees, but every program is not so “official.”
Unauthorized file sharing is easy, cheap (meaning free) and illegal. Consider the case of BMG Music et al v.
Cecilia Gonzalez. In this case, a federal court ruled that the illegal downloading of songs by a consumer (as in the
individual doing the downloading, not the entity responsible for the file-sharing platform) constituted copyright
infringement. The damages awarded against her totaled $22,500—for downloading 30 songs at $750 penalty per
Seem steep? It could have been much worse. The defendant had actually downloaded 1,370 songs. Federal law
permits an assessment of $30,000 per song. Had they chosen the full course of action, damages against
Gonzalez in this case would have resulted in over $41 million!
This case is proof that the federal government intends to secure the integrity of copyrights, even if it means
rendering judgment against individual consumers. The bad news for these consumers is that such a judgment will
not be covered by homeowner’s insurance.
Personal liability afforded under a typical homeowners insurance policy does not cover liability claims that do not
involve bodily injury or property damage arising out of an “occurrence.” Since “occurrence” constitutes an accident
or exposure to harmful conditions, it is not likely the insurance company will look any further to find a reason to
provide you with coverage (downloading that latest Springsteen track for free was no accident).
Even if you did jump that hurdle, you’re still fighting an uphill battle. Property damage constitutes physical injury to
tangible property: ripping off mp3 files hardly fits the bill.
Even homeowners with personal injury liability (which extends liability insurance to pay claims such as libel,
slander, and violation of privacy rights) are exposed: This insurance says nothing of covering claims of copyright
violation, nor will it cover criminal acts.
This information should serve as a somber reminder that households downloading illegal files are in danger of
incurring a large out-of-pocket expense that no personal insurance intends to pay. Parents should be especially
careful; in many households it is not mom or dad downloading the copyrighted music. A look at the music library
on many children and teenager’s computers could shock you—they could have hundreds or thousands of songs.
If your children are file-sharers, check their preferred sources for legitimacy and remind them why this is
When it comes to downloading music, “free” can come with a big price. Enjoy the tunes but proceed with caution.
If you have any questions about this article, please call our office.
Copyright 2008 by the Independent Insurance Agents & Brokers of America, Inc. All rights reserved.
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NOTE: Policy coverages and circumstances can change at any time, so the information above may not be
accurate at the time of reprinting or subsequently to that time. IIABA does not assume and has no responsibility
for liability or damage which may result from the use of any of this information. The most current, up to date
version of this article can be found at IIABA’s Virtual University at http://www.iiaba.net/VU.