We have been known to say that commercial general liability insurance covers two primary things: property damage and bodily injury.
Although that is a simple way to put it, that is not the entire story. There is a section in this policy that covers other business-related liabilities (including defamation insurance), and it’s called personal and advertising injury liability.
We’ll be looking at that section of the policy today because it covers certain defamation-related liability claims.
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What is defamation?
The Legal Information Institute defines defamation as a statement that injures a third party's reputation. The tort of defamation includes both libel (written statements) and slander (spoken statements).
To prove defamation, the statement must include four elements:
You must present the false statement as fact.
You must communicate that false statement to a third party.
You must at least be negligent.
Your statement must have caused harm to the subject of your statement.
Libel Vs. Slander
The differences in libel and slander lie in the medium where the defamation occurred. Libel is always in the form of written statements or communication. In comparison, slander is when the defamation occurs through verbal communication.
Social Media Is Increasing Libel Risk
The ability for individuals and businesses to rapidly release information online with little to no oversight has increased the risks associated with libel.
We see this in scenarios where entry-level employees make disparaging remarks about a competitor or fail to get approval when posting photos and certain advertisements.
As the world goes digital and the barrier to releasing communication weakens, the risk for defamation lawsuits goes up.
Does insurance cover defamation?
Yes, insurance can cover defamation, but how it covers defamation will depend on your business.
Here are the four common ways that defamation can be covered on a business insurance policy:
General Liability
As mentioned above, the most common way businesses are covered from defamation claims is their commercial general liability insurance policy is under the "Personal & Advertising Injury" section of the policy.
Here is an example of what types of communication a general liability policy can cover:
And to further clarify the definition, let’s look at how the policy defines advertisement:
Directors And Officers Insurance
Some directors and officers insurance policies include "personal injury" coverage, which is commonly an umbrella term that covers libel and slander.
Unlike the commercial general liability coverage for defamation, coverage on this policy is not standardized. You need to understand your unique policy; if you have personal injury coverage, make sure that the policy covers individuals besides your board of directors.
Cyber Liability (Recommended)
Many modern-day cyber insurance policies cover defamation in their media liability section. Many of these policies fill in the coverage gaps left on the defamation coverage provided on the commercial general liability policy.
For example, Evolve, a leading provider of cyber insurance in the U.S., offers a policy that complements the standard general liability policy very well.
Their policy states:
If you flip a couple of pages to figure out the definition of media content, you’ll see the policy covers a broad array of situations that the general liability policy does not cover. Additionally, it excludes claims arising from advertisements, which are not covered under the commercial general liability policy. This way, you avoid a double insured situation.
The Rub
Like most good things, defamation insurance won't cover any and all claims; every defamation insurance policy excludes intentional or malicious acts, which means you cannot intentionally slander someone and expect insurance to cover it. The intention of insurance is to cover unintentional accidents and situations that arise while running a business.
Summary
If you are looking for additional clarity on your current insurance policy or want defamation coverage, let us know. We will walk you through and let you know how to best protect your business from this growing problem.
