Personal and advertising injury is a defined term in most general liability policies, including the standard policies issued by the Insurance Services Office (ISO). Its meaning determines the types of offenses that are covered under Personal and Advertising Injury Liability. Personal and advertising injury coverage means injury arising out of one or more of the offenses outlined below.
False Arrest, Detention or Imprisonment
False arrest refers to the unlawful physical detention of a person. For example, you are having a verbal disagreement with Ted, a consultant you've hired. When Ted tries to walk out, you lock your office door. You refuse to let him leave until he's heard your side of the argument. Two hours later, you finally let him leave. Ted sues you for false arrest.
False imprisonment occurs when one person physically confines another person without legal authority, either by force or by the threat of force. Pretend for a moment that you own a grocery store. You noticed that Bill is fingering the candy bars and you suspect he has hidden one in his clothing. You grab Bill's arm and insist he accompanies you into your office. You don't allow him to leave until thirty minutes later when you are finally convinced that he hasn't stolen anything. Bill later sues you for false imprisonment.
Malicious prosecution is defined as civil or criminal action without probable cause. To successfully sue for malicious prosecution, a person must prove that he or she was the subject of a malicious lawsuit or criminal action, which was resolved in his or her favor.
In this scenario, you own a computer repair business. Funds seem to be disappearing, and you suspect that your bookkeeper, Jane, is embezzling money. You summon the police and insist that Jane should be arrested and charged with theft. Two months later, you discover that the thief is Bob, your business partner. The charges against Jane are dropped for lack of evidence, and Jane sues you for malicious prosecution.
Wrongful Eviction, Entry, or Invasion of Private Occupancy of a Room, Dwelling or Premises
Wrongful eviction means the removal of a tenant by a landlord in violation of state or local eviction laws. Wrongful entry and invasion of private occupancy refer to the unlawful entry into rented space by the landlord, or the landlord’s interference of the tenant’s use of that space. To qualify as personal and advertising injury, these offenses must be committed against the occupant by the property owner, landlord, or lessor.
Libel, Slander, or Disparagement of Goods, Products, or Services
Libel and slander are types of defamation. Libel is defamation through writing and other visible media. Slander is verbal defamation. "Disparagement of goods, products or services" means false, derogatory statements about a company’s products or services that are intended to dissuade customers from buying them.
For the next few scenarios, let's pretend that you operate a bakery called Best Buns. A competitor, Bill's Bakery, has lured away some of your customers. To entice them back, you publish a newspaper ad highlighting your use of fresh ingredients. Your ad states what you believe -- namely that Bill's bread tastes like cardboard because it is made of inferior flour. In reality, Bill's Bakery uses the same high-quality flour you do. Bill's Bakery sues you for product disparagement.
Acts of libel, slander, or product disparagement may qualify as personal and advertising injury whether or not you commit these offenses in the course of your advertising activities. To that end, should you mention the same belief -- that Bill's uses inferior ingredients, thus affecting the flavor or quality of its products -- in a speech you give at a social function for small business owners, Bill's Bakery may have grounds to sue you for slander; but the claim should be covered under your general liability policy.
Written Publication of Material That Violates a Person's Right of Privacy
Violation of privacy refers to the intrusion into someone’s personal life through spoken words or publication of written material. Let's say that you're in the waiting room at your therapist's office. You know that Bill is currently meeting with the therapist, so you put your ear to the wall. You overhear Bill telling the therapist that he recently spent six months in a mental institution. One week later, you publish a newsletter that you distribute to businesses in your community. You include a synopsis of Bill's Bakery, mentioning Bill's stay in a mental institution. Bill sues you for an invasion of privacy.
Use of Another's Advertising Idea in Your Advertisement
Suppose that Bill's Bakery has developed an ad campaign for his business using balloons that are distinctively shaped and colored. You publish an ad for your bakery that contains pictures of balloons, which are the same shape and color as the ones Bill is using. Bill's Bakery sues you for using its advertising idea without its permission.
Infringing Upon Another's Copyright, Trade Dress, or Slogan in Your Advertisement
Copyright is awarded to the creator of an artistic work, such as a book, film, or musical recording. It gives the author an exclusive right to reproduce it. Copyright infringement refers to the use or reproduction of the work without the copyright holder’s permission.
Trade dress refers to the physical appearance of a product, including the manner in which it is packaged, labeled, promoted, or advertised (including graphics used). If you copy the product's appearance without the manufacturer's permission, you may have committed trade dress infringement.
Heading back to Best Buns, let's pretend that you decide to bake and sell cookies as well. Bill's Bakery sells triangle-shaped cookies packaged in a purple triangular container with white lettering. You begin selling triangular cookies, as well. You package your cookies in a container that looks just like Bill's. Bill's Bakery sues you for trade dress infringement.
A slogan is a unique phrase used by a business entity to attract attention to its advertising. If you use another company’s slogan in your advertising without its permission, you may be subject to a lawsuit.
To be covered as personal and advertising injury, your infringement upon someone's copyright, trade dress, or slogan must occur via your advertisement. If you are sued for copyright infringement because of the material you reproduced without the consent in a trade journal article, your liability policy will not cover the suit.
Consequential Bodily Injury
Personal and advertising injury also includes consequential bodily injury that arises out of the offenses described above. That is, if an act such as false arrest or slander leads to bodily injury, the injury should be covered as personal and advertising injury.
For example, Jane contends that she developed migraine headaches as a consequence of your act of malicious prosecution. She seeks compensatory damages for both bodily injury and personal and advertising injury. Because the bodily injury occurred as a consequence of a personal and advertising injury offense, it should be covered under your Personal and Advertising Injury (Coverage B) rather than Bodily Injury and Property Damage Liability (Coverage A).
The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current legal advice, please consult with an attorney.