Coverage for liability from personal and advertising harm.
Personal and Advertising Injury coverage is an essential component of commercial general liability insurance.
It protects businesses from claims arising out of personal damage or advertising harm, which are typically not tied to physical injuries but can result in significant financial liability.
Personal injury typically encompasses claims such as false arrest, slander, defamation, and invasion of privacy.
Advertising injury, on the other hand, often includes claims related to copyright infringement, misappropriation of advertising ideas, or publication of material that violates an individual’s right to privacy.
This type of coverage is essential for businesses that engage in advertising and promotion, as it safeguards against lawsuits that may arise from marketing activities.
For example, a company may inadvertently use a copyrighted image in an advertisement, leading to a lawsuit from the copyright holder.
The importance of personal and advertising injury coverage lies in its ability to protect the financial stability of a business while allowing it to promote its products and services effectively without fear of extensive litigation costs.
With the rise of online advertising and social media, the risk of personal and advertising injury claims has increased substantially.
Examples:
A Pew survey revealed that 41% of respondents experienced harassing behavior online, with 18% enduring severe forms such as physical threats or sustained harassment.
Insurer Chubb reported an 84% rise in online harassment claims in 2018 and a 15% increase in 2019 year-to-date, indicating a growing trend in social media-related claims.
The widespread use of social media influencers has heightened the risk of copyright infringement. For instance, Bang Energy faced liability for influencers using over 200 copyrighted recordings in paid social media posts without authorization
As businesses increasingly engage in online marketing, they face heightened risks of allegations such as disparagement, libel, slander, and copyright infringement.
Examples of Personal and Advertising Injury Claims
Marketing Agency
A marketing agency produces an online ad featuring a popular public figure without permission. The public figure sues the agency for invasion of privacy, but the agency’s personal and advertising injury coverage protects them against financial loss.
Clothing Retailer
A clothing retailer uses a photo of an artwork in its promotional materials, not realizing it’s copyrighted. When the artist files a lawsuit, the retailer’s insurance covers the legal costs associated with the claim, safeguarding their finances.
Pros and Cons
Personal and advertising injury insurance offers both advantages and disadvantages for businesses.
This type of coverage provides essential protection against claims related to non-physical injuries, such as defamation, copyright infringement, or false advertising.
Such protection can be invaluable in safeguarding a company’s reputation and financial stability, and bolster credibility with clients and partners.
Personal and advertising injury coverage often forms a part of a business’s general liability policy, which can simplify insurance management by bundling various forms of protection into a single policy.
However, this coverage may come with limitations that could reduce its effectiveness.
This is because many policies include specific exclusions to coverage, leaving businesses vulnerable to unforeseen risks.
Navigating claims related to personal and advertising injury can be complex, with potential legal nuances that may delay resolution or create challenges in proving liability.
The cost of obtaining this type of insurance can also be significant, especially for smaller businesses.
Did you know?
Many standard General Liability (CGL) policies exclude Personal and Advertising Injury coverage for online content posted by businesses on their own platforms.
Why is this surprising?
- Many businesses assume that their general liability policy automatically covers any advertising-related claims, including those from social media or their website.
- However, insurers often exclude coverage for content published by the insured business itself on its own digital platforms. This means that defamation, copyright infringement, or misleading advertising lawsuits stemming from a company’s social media posts or website may not be covered.
Example of the Risk:
- A company posts a negative review about a competitor on its blog or social media.
- The competitor sues for defamation.
- The company expects its General Liability policy to cover the claim.
- However, the policy might exclude coverage because the defamatory statement was published on the company’s own website or social media page.
- The company is left paying legal costs out of pocket.
How Can Businesses Protect Themselves?
To cover online-related advertising risks, businesses may need to:
- (Obviously!) check existing policies for exclusions related to digital and social media content.
- Consider Media Liability Insurance or a specific Cyber Liability policy that includes personal and advertising injury coverage for online content.
- Train employees and marketing teams on legal risks related to online posts, including defamation, copyright infringement, and false advertising.
Bottom Line:
The rise of social media and online advertising has created gaps in traditional business insurance policies, which requires proactive steps to ensure appropriate risk coverage is maintained.
Category: Liability Coverage
References and further reading about Personal and Advertising Injury: