YouTube has something it calls "ContendID", an automated system that listens to videos and determines what song is being played. If you uploaded a cover song, you'll eventually get a notice of third party content. Usually, the copyright owner will keep your video active and just put ads on your video... but recently, the ContentID system matched my cover of "Panecea" by Rush to "JUSAGROOVE" by Chic. There is no way to tell YouTube that they made a mistake. I just had to delete the video. Has anyone else run into this problem?
Beyond that, what kind of legal problems can you run into from posting cover songs? Can you be sued?