October 29th, 2020
The commercial general liability (CGL) insurance policy covers many of the risks your business might face. It is most commonly known as bodily injury and property damage (covering injuries that you cause other people, or damage you cause to another's property).
However, there is a lot more to it, including an entire coverage section focused on a subset of risk businesses face through normal business operations.
It’s called "Coverage B: Personal And Advertising Injury Liability."
There are two parts to personal and advertising coverage included in your CGL insurance policy. They are personal injury liability and advertising liability.
Here is what each of them means:
Personal Injury Liability: This covers liability arising from intentional torts, such as libel, slander, wrongful eviction, false arrest, and invasion of privacy.
Advertising Liability: This covers liability caused by harms from claims such as misappropriation of advertising ideas, style of doing business, or copyright infringement.
Each of these two coverage parts, which are always combined, create a coverage section that provides businesses with much more coverage than the typical bodily injury and property damage claims.
What do personal and advertising injury claims typically look like? Here are three you might encounter.
A retail store’s security sees that a person has grabbed an item off the shelf and is now trying to exit the store without paying.
The security team decides to take action and confront the thief. They take the suspect to the back room and won't let them go until the police arrive.
It is later discovered that the "suspect" in question never stole any goods and the security team detained a person for no reason. A lawsuit is filed against the retail store for false arrest.
This an example of a false arrest personal and advertising injury claim.
A commercial landlord who owns a shopping center in an up-and-coming area increases the rent on all their tenants by 30%.
A long-term tenant is very angry with the price increase and decides to not renew their lease. In anger, the tenant damages the building during the move-out process by ripping fixtures out of the wall, damaging drywall, and ruining countertops.
The landlord decides to lock the tenant out of the property ten days before the end of the lease to avoid additional damage.
The landlord is later served a lawsuit for wrongful eviction. Luckily, wrongful eviction is a covered personal and advertising injury claim.
A small coffee shop named "Gibraltar Coffee" opens up for business in early 2020. By August, they have two employees and are developing a steady customer base.
They are notified that they are being sued by the largest coffee corporation in the U.S. Even though a "Gibraltar" is an industry term used across the country, this large coffee corporation alleges that they own the term "Gibraltar" and no other coffee shop can use that term in an advertisement.
The personal and advertising injury coverage will provide and pay for the legal defense team to defend your brand in court, as well as pay damages that you might be responsible for.
The commercial general liability insurance policy does not cover things like false arrest, wrongful eviction, and copyright infringement if you are doing them on purpose.
The commercial general liability policy does have broad coverage for allegations of libel and slander. To receive the provided coverage, though, the claim must not arise from material that you knew was false but published regardless.
The standard commercial general liability policy does not cover material published prior to the effective date of the policy. Take this into consideration when switching to a different insurance carrier!
Like almost every insurance policy, it does not provide coverage for claims that arise out of criminal or illegal acts.
If you accidentally advertise the wrong prices on goods you sell and don’t have the means to follow up on that pricing, the CGL policy will not cover the pricing error.
If you advertise your product’s performance or quality in a certain way, and the product does not live up to your statements, this policy will not cover the inaccuracies in your advertisements.
Let's say you design and manufacture air compressors. You run an advertisement that your new compressor can achieve a very high PSI that the compressor can't actually achieve, any claims arising from this would be excluded.
If media and advertising is your business, this coverage part is excluded almost entirely. The exposures to most of the risks covered in the personal and advertising injury section (libel, slander, copyright infringement, violation of privacy, and so on) are much greater for a company in that line of work. You need a policy that is made specifically for your exposures. Generally, advertising firms will find this coverage on their professional liability insurance policy (or advertising E&O).
Chat rooms and online bulletin boards are examples of a specialized type of operation that will need an insurance policy specific to the industry they are in. A standard CGL policy will not cover claims if you own, host, or manage an online chat room or bulletin board.
'While the intention behind this form was to help insurance companies avoid the exposure of personally identifiable information (PII), this endorsement excluded much more than that. It excludes "oral or written publication, in any manner, of material that violates a person's right of privacy."
This exclusion could extend to things like a dentist posting a before-and-after picture and the client alleging it invades their privacy. Other examples include a nonprofit using a picture of someone online to promote the organization without that person's permission, or a roofing company using a drone to inspect a roof and accidentally recording someone sunbathing in their backyard.
We recommend avoiding this endorsement, if possible.
For businesses in industries like marketing, website design, and law, personal and advertising injury will be a component of their E&O insurance policy and not their CGL policy.
This usually happens for a reason. For example, if you are in the marketing field and you accidentally use copyrighted music, that is a professional oversight and better covered under a professional liability policy and not a CGL policy.
Additionally, if you are an attorney, you are at a much higher risk of a libel or slander suit than most other fields. Your attorney malpractice policy is better equipped to handle an attorney's specific needs versus the standard commercial general liability policy.
In the past, you could tell if you had personal and advertising injury coverage by checking the limit on the declarations page.
We are seeing some insurance companies putting personal and advertising injury liability in a "Liability and Medical Expenses" limit instead of its own limit. Although most companies still have a dedicated limit, it is worth noting that you might still have coverage. Most policies that do not include this coverage will indicate "EXCLUDED" on the declarations page.
Personal and advertising injury liability is important to most businesses. It can help you recover from mistakes you make in oral and published material, as well as some additional coverages such as false arrest and wrongful eviction.
If you’d like to learn more about this type of policy, feel free to get in touch with us today.
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