Cyber Liability

Pokemon Go, Harry Potter, & Augmented Reality Insurance Risks

Carl Niedbala
Updated: Sep 10, 2024

TL:DR

Key Takeaways

Managing Partner; COO & Co-Founder

Are you one of the 30 million worldwide users who has downloaded Pokemon Go in the last few weeks? It’s likely, since the app has been downloaded more times in its short existence than Tinder has over the past four years.

Regardless of whether you run around chasing Pokemon in your day-to-day, chances are you know someone who does or you have been bumped into by someone trying really hard to catch that Squirtle on the walk home. People are literally selling their accounts for upwards of $100 and there are gamers happily paying the price. Police have been called because Pokemon are getting “stolen.”

So what’s the appeal? Is the app just speaking to a much younger version of ourselves that once loved to get lost in this mythical world? There are rumors of a Harry Potter game to follow, and it seems there’s no turning back from augmented reality gaming. Overlapping this fictitious world onto our real one (via augmented reality) is starting to cause some very real problems.

The Russian Bank is taking these risks very seriously, offering up to 50,000 rubles ($800) of free insurance coverage to users of the app. Here in America, it’s more likely that the app developer will be held responsible for these incidents.

If you’re developing apps in the augmented reality space, here are the risks you should know about.

Augmented Reality Insurance Risks

1. Bodily Injury

Scenario 1: People are getting into fights → while this video is a spoof, it isn’t entirely unlikely
Scenario 2: Distracted drivers are getting into accidents (ex. 1 & 2)

How to cover it:

General Liability covers physical injury, property damage, and bodily injury claims brought forth by a 3rd party. This will cover costs of litigation and costs incurred by the injury (ex. Settlements, medical costs, damages, etc)
Exclusions to watch for: “Expected or Intended” injuries → If the injury was intentional or should have been expected by the insured, the injury wouldn’t be covered under the policy.

2. Property Damage

Scenario 1: Gym (hotspot) set up on someone’s home: Could potentially lead to damage of the homeowner’s property, injury to trespassers or homeowner

How to cover it:

Again, a properly written General Liability would kick in here.
Exclusions to watch for: Property damage to property owned by the insured will not be covered

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3. Abuse & Molestation

Scenario 1: There have been reports of child predators using this app to get closer to children

How to cover it:

General Liability with an Abuse & Molestation sublimit – remember, general liability will cover all 3rd party bodily injury claims unless excluded. Many insurance companies offer this coverage explicitly on the GL form to avoid confusion…you just need to know to ask for it!
Exclusions to watch for: Abuse or Molestation → excludes abuse or molestation when the party involved is in the direct care, control or custody of the insured. You should make sure this exclusion doesn’t also include third parties! A&M claims could also be consider “expected or intended” injury, so removing this exclusion and endorsing a sublimit on to the policy is pretty crucial.

4. Assault & Battery

Scenario 1: robbers are choosing victims via hotspot locations (ex. 1, 2 & 3)

How to cover it:

General Liability with an Assault and Battery sublimit. Same abuse & molestation logic applies here.
Exclusions to watch for: Assault and Battery → usually covered by the same “expected or intended” exclusion mentioned above.

5. Theft of Personal Information

Scenario 1: servers are being hacked
Scenario 2: personal data is being stolen using fake apps loaded with malware

How to cover it:

Get a Cyber Liability Insurance policy → Covers data breaches and theft of 3rd party information (also covers the cost of interrupted business operations!)
Exclusions to watch for: Fraud, Criminal, Dishonest Acts → though this typically only excludes acts committed by an insured, make sure third parties are not listed as excluded as well. Failure To Follow Minimum Required Security Practices → before binding a policy, an insurer will ask a series of questions about the steps the company is taking to protect electronic data. If the insured failed to implement such measures when the claim is comes in, it may not be covered.

There are some pretty unique augmented reality insurance risks that can be addressed with some properly designed insurance policies. As an AR company, it’s important to be aware of the risks facing your company and get a customized augmented reality insurance program in place. Reach out to us at (646)-854-1058 or info@foundershield.com and we’ll make it happen!