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Commercial general liability insurance is meant to protect your business from lawsuits claiming damage you may have unintentionally inflicted upon a third party. Though bodily injury and property damage often pose the most obvious threats, many business owners are less aware of exposure to non-physical personal injury. For instance, if a retail store owner holds a customer for suspected shoplifting, only to find out later that the individual is found innocent, the shopper might sue the owner. Or if a business owner takes out an advertisement that unintentionally infringes upon another company’s copyright, a lawsuit could easily follow. For these reasons and many more, Personal and Advertising Injury Coverage is included in general liability insurance in order to protect business owners against various forms of non-physical personal injury.
What is Personal and Advertising Injury Coverage?
Personal and Advertising Injury Coverage is included in commercial general liability insurance and protects you from third-party lawsuits claiming non-physical personal injury. As opposed to the broad protections of the bodily injury and property damage coverages in a CGL policy, Personal and Advertising Injury Coverage is meant to provide coverage for a specific set of non-physical personal injuries, including and limited to:
- False arrest, detention, or imprisonment
- Malicious prosecution
- Wrongful eviction, entry, or invasion of the right of private occupancy
- Slander, libel, or disparagement
- Publications that violate privacy
- Use of another’s advertising idea in your advertisement
- Copyright, trade dress, or slogan infringement in advertising
- Your landscaping business has always done well in your area, but recently, a few new competitors have cropped up and gained much of your usual business. You post a chart on your website comparing the services you provide to theirs, inadvertently publishing a number of statements about your competitors that turn out to be false. Your competitors sue you for libel.
- Your bakery has gained fame in recent years for its unique take on the mochi muffin. Though your recipe is kept locked in a safe, you notice that many bakeries in your local area have started to copy your muffin, sometimes in exacting detail. You check your safe and realize the recipe is gone. You suspect one of your vendors has stolen your recipe, since you recently argued with him over a contract. You call the police to arrest him and have him charged for theft. Months later, you find out that one of your employees sold your recipe to a number of local bakeries. The charges are dropped against your vendor, and he sues you for malicious prosecution.
It’s important to note that Personal and Advertising Injury Coverage only applies to intentional acts that result in unintended consequences. If a business owner knowingly causes injury, coverage would be excluded.
What is included in Personal and Advertising Injury Coverage?
Personal and Advertising Injury Coverage will cover your business for any legal fees, judgements, or settlements resulting from lawsuits claiming the following offenses:
False arrest, detention, or imprisonment. This offense refers to holding someone against their will and denying their personal liberty in an unlawful or unjustified manner.
- Example: You own a convenience store and suspect a customer of shoplifting. You force the customer to the back office and keep him detained until you review the security footage. After reviewing the security video, you realize you’ve made a mistake, and, in fact, the customer did not steal anything. The customer sues you for false imprisonment.
Malicious prosecution. This offense involves bringing criminal or civil legal action against someone without probable cause and with the intention of doing harm. The defendant in the case must show that the claim ended in his or her favor.
- Example: You run a driving instruction school, and over the weekend, five of your company cars were stolen. You suspect the culprit is a recent client, who you recently had a disagreement with. You have him arrested and charged with theft. A few weeks later, the police track down your cars and are able to arrest the real thief, who ends up having no ties to the customer you suspected. All charges are dropped against the customer, who, in turn, sues you for malicious prosecution.
Wrongful eviction, entry, or invasion of the right of private occupancy. This offense involves wrongful actions by a landlord, property owner, or lessor. The actions include wrongfully expelling a tenant from their premises in violation of local or state laws, wrongfully entering a tenant’s premises, or violating a tenant’s privacy through impeding their right to occupy a premises.
- Example: You own a commercial building, and one of your retail spaces is being leased by a marijuana dispensary. The other retail tenants in your building have complained about the dispensary bringing in unsavory clients and negatively affecting foot traffic for their businesses. You decide to evict the dispensary, giving them two weeks to move out. Unfortunately, you did not know this was in violation of local eviction laws, and the dispensary sues you for wrongful eviction.
Slander, libel, or disparagement. This offense refers to any defamation by speech (slander), defamation in written or visual form (libel), or discrediting of another’s products, goods, or services (disparagement).
- Example: Your software company develops marketing automation software, and you recently ran a blog post comparing your product to three of your competitors. In it, you called out deficiencies in your competitors’ products, namely how they are running on inferior and outdated technology stacks. Unfortunately, many of your statements turn out to be untrue, and one of your competitors files suit against you.
Publications that violate privacy. This offense refers to any oral or written publication that violates a person’s right of privacy. Common privacy violations include: using a person’s likeness or name without permission, intruding into a person’s private affairs, using publicity to put someone in a negative light, or disclosing private information about someone.
- Example: You own a local chain of pizzerias, and recently, a celebrity visited one of your restaurants. You were able to take a picture with her, and you want to get the word out about this amazing visit. You create an advertisement, featuring the photo you took, and post it across social media. The celebrity sees the ad and ends up suing your pizzeria for invasion of privacy, as you used her image without permission.
Use of another’s advertising idea in your advertisement. This offense involves misappropriating another company’s advertising concept, theme, or idea in your own advertising.
- Example: Your pest control business is rolling out a new orange oil termite treatment, and in order to get the word out, you publish a newspaper ad featuring an image of a termite being crushed by an orange. Unfortunately, this ad looks remarkably similar to an ad that a competing termite control business recently ran. They sue you for misappropriating their advertising idea.
Copyright, trade dress, or slogan infringement in advertising. This offense refers to any use of another’s copyright, product or packaging appearance (trade dress), or slogan without permission in an advertisement.
- Example: Your real estate firm launches a new advertising campaign, featuring your new slogan, “Let us guide you home.” Unfortunately, this slogan is the slogan of a national real estate firm. You are sued for using their slogan without permission.
Does Personal and Advertising Injury Coverage include bodily injury?
While Personal and Advertising Injury Coverage is focused on non-physical personal injuries, it does include coverage for consequential bodily injury, which refers to bodily injury that results from personal and advertising offenses.
- You have wrongly evicted a tenant from your commercial property, and because of this, the tenant loses his main source of income, causing him undue hardship. The tenant suffers from high blood pressure, and given the additional anxiety and stress he experiences as a result of being evicted, he has a mild heart attack and must be hospitalized. The tenant sues your firm for both wrongful eviction and bodily injury.
What are the exclusions to Personal and Advertising Injury Coverage?
Personal and Advertising Injury Coverage includes a number of exclusions, including:
- Intentional injury: Personal and Advertising Injury Coverage provides protection for intentional acts that cause unintended consequences. However, if you knew your actions would result in injury, coverage would be excluded.
- Publications with intentional falsity: Similar to the intentional injury exclusion just mentioned, if you make or publish statements that cause injury, knowing what you’re saying to be false, coverage would be excluded.
- Contractual liability: If you have assumed liability for personal and advertising injury through a contract or agreement, coverage would be excluded.
- Breach of contract: If injury arises out of failure to adhere to the terms and conditions of a contract that you signed, coverage would be excluded.
- Quality, performance, or price of goods: If you advertise your product, goods, or services to be of a certain quality or price, but fail to meet those standards, resulting in injury, coverage would be excluded.
- Intellectual property: If you infringe on someone’s copyright, patent, trademark, trade secret, or other intellectual property, coverage is generally excluded. The two cases where this exclusion does not apply include using someone’s advertising idea in your advertising and infringing on someone’s copyright, trade dress, or slogan in your advertising.
- Media and internet businesses: If your business develops content or advertising on behalf of other companies or distributes or provides a platform for publication for other companies, you may not be covered for the slander, libel, injuries to privacy, or copyright infringement sections of personal and advertising injury.
- Chatrooms, forums, or bulletin boards: If injury arises out of statements made in a chatroom, forum, or bulletin board that you own or host, coverage would be excluded.
- Unauthorized use of a person’s name or product: If you try to mislead another company’s customers by unauthorized use of someone else’s email address or domain name, coverage would be excluded for any resulting injury.
- Pollution, war, criminal acts, or violations of the law
Personal and Advertising Injury Coverage can offer you protection from lawsuits that might not be apparent at first glance. Unlike the bodily injury and property damage coverage provided by your general liability policy, claims under Personal and Advertising Injury Coverage generally revolve around non-physical, reputational injuries. Though this type of coverage only covers a specific set of offenses, it can help add to a comprehensive general liability policy, as not all accidents or injuries are physical in nature.