There’s no doubt social networking is here to stay. Sites like Facebook, LinkedIn and Twitter have exploded in popularity, but they’re also opening people up to identity theft and lawsuits, according to a report by registeredrep.com. The site says research done by Chubb Group of Insurance Companies found that the sites are opening up the affluent to lawsuits involving slander and libel.

For instance, children of wealthy individuals who put an inappropriate comment on their Facebook status or send out a damaging tweet could be exposing their parents to costly lawsuits, according to Jim Fiske, vice president and US marketing manager for Chubb. “One client’s son and friends had created on MySpace a real-looking but fictitious page for their teacher,” Fiske told registeredrep.com. “They had imported pornographic material and superimposed the teacher’s head on the bodies. The teacher filed a lawsuit for slander, which is not covered by most standard liability insurance policies. The boy’s family was on the hook for a million dollars in defense and settlement costs.”

According to experts, this is an example of why financial advisors and wealth managers need to evaluate their clients’ insurance policies to find out if their covered for unusual circumstances like this. It’s called risk management and it can expose a client’s property and liability exposure. “It underscores that wealth preservation is just as important for wealth managers as wealth accumulation,” Fiske told the website.