Personal and Advertising Injury Liability Coverage
Personal and Advertising Injury, often called Coverage B, is automatically included in a general liability policy. Many policyholders are confused by this coverage. They wonder how it differs from Coverage A, Bodily Injury and Property Damage Liability. This article will answer that question.
Limited in Scope
One major difference between Coverage B and Coverage A has to do with the scope of coverage. Coverage A is very broad. It covers virtually any claims or suits for bodily injury or property damage caused by an occurrence, Such claims are generally covered as long as they aren't subject to any exclusions. Coverage B is much narrower. It applies only to claims that result from the specific offenses included in the definition of personal and advertising injury. If a claim does not arise from one of the offenses listed in the definition, it isn't covered.
Covers Intentional Acts, Not Intentional Injury
Another difference between Coverage B and Coverage A has to do with the types of acts they cover. Coverage A applies to bodily injury or property damage caused by an occurrence that results from your negligence. This term means the failure to exercise reasonable care. Negligence is a tort (civil wrong) that is committed unintentionally.
For example, suppose that you own a grocery store. While walking through the produce aisle, you fail to notice a puddle of water on the floor. A customer slips and falls on the wet floor, sustaining a back injury. The accident occurred because you were negligent, not because of something you did intentionally.
Unlike Coverage A, Coverage B covers intentional torts. Intentional torts are deliberate acts. For example, suppose that you own an apartment building. Tim, one of your tenants, has been acting suspiciously, and you fear he may be conducting a drug-making operation.You wait until Tim is out and then enter his apartment (an intentional act) to look for drugs. Tim learns that you were in his apartment without his permission and sues you for wrongful entry. Wrongful entry is an intentional tort that is covered under Coverage B.
Thus, Tim's claim against you should be covered by your general liability policy. Other examples of intentional torts that are insured under Coverage B are libel, slander and false arrest.
Personal Injury Versus Advertising Injury
In the past, liability policies divided Coverage B offenses into two categories: (1) those that were committed in the course of advertising activities, and (2) other offenses. The offenses in the first group were called advertising injury while those in the second group were called personal injury. In the mid-1990s, the two coverages were combined. Nowadays, most policies (including the ISO policy) provide a single coverage called personal and advertising injury.
Requirements for Coverage
To be insured under Coverage B, a claim must seek damages for personal and advertising injury caused by an offense that arises out of your business. The offense must be committed in the coverage territory and during the policy period. No coverage is afforded for an offense that arises from material you published prior to the policy period.
Media and Internet Companies Not Covered
Coverage B is intended to cover advertising and publishing activities that your company performs on its own behalf. It does not cover such activities you perform for another company. If you are in the business of advertising, publishing, telecasting or broadcasting, you need specialized insurance called media liability coverage.
In addition to media companies, Coverage B also excludes companies involved in certain Internet-related activities. These include Internet search companies, Internet service providers and companies that provide Internet content. If your company performs these functions, you need a special type of errors and omissions coverage.
Coverage B is subject to the following exclusions:
Knowing Violation of Rights Coverage B applies to intentional acts that result in unintentional injury. It does not cover injury that you inflict on someone deliberately. Thus, no coverage is provided for an offense if you knew, when you committed it, that it would violate someone’s rights and cause injury.
Publication With Knowledge of Falsity False statements you published verbally or in writing are excluded if you knew they were false when you published them.
Contractual Liability Coverage B excludes liability for personal and advertising injury that you assume on behalf of someone else under a contract.
Breach of Contract Claims that arise from your failure to adhere to the terms of a contract aren't covered. This exclusion contains an exception. Coverage is afforded for breach of an implied contract to use someone else's advertising idea in your advertisement.
Statements About Price or Quality Coverage B excludes false statements you make in an advertisement about the price or quality of your product or service. For instance, suppose you publish an ad stating that your business, Best Buns, uses 100% organic ingredients in all of its products. If a customer sues you because the muffin she bought from you contained no organic ingredients, the claim will not be covered.
Intellectual Property No coverage is provided if you infringe upon someone else's copyright, patent, trademark or trade secret. An exception applies to an infringement (in your advertisement) of someone else's copyright, trade dress of slogan. Such infringement is included in the definition of personal and advertising injury.
Chatrooms, Bulletin Boards, Unauthorized Use Claims that result from your Internet chatrooms or bulletin boards, or your unauthorized use of someone's email address or domain name are excluded.
War, Pollution, Certain Laws Coverage B excludes war, pollution and violations of the Telephone Consumer Protection Act and the CAN-SPAM Act. The TCPA prohibits certain marketing solicitations via telephone or fax. The CAN-SPAM Act applies to unsolicited emails.
Some policies may contain exclusions not listed above.
Personal and advertising injury coverage is subject to a limit that applies to "each person or organization". This limit is the most the insurer will pay for all damages assessed against any one person or company. Damages or settlements paid under Coverage B are also subject to the General Aggregate limit in the policy.
If you are sued for an offense that is covered under personal and advertising injury liability, your insurer will defend you. The costs related to your defense will not reduce the limits cited above. In other words, your defense costs will be paid in addition to the limits.