What Is Defamation and How Can Insurance Protect You?
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Defamation is a legal concept that implies a person or organization has made false claims about an individual or corporate entity that is false or harmful. Where defamation in insurance comes into play are the various coverages available to businesses that can protect them from slander or libel claims.
Learn what your defamation insurance options are below, as well as how you can avoid a defamation claim.
What Is Defamation in Insurance?
Defamation is a legal term that refers to the act of making a false statement about a person, group or organization that causes harm to their reputation or standing in the community.
A recent case of defamation involved the voting machine company Dominion and the Fox News outlet in regard to the 2020 presidential election. Dominion sued Fox for damaging its reputation after Fox attempted to link Dominion to the rigging of the presidential election against Donald Trump. The court case ended with a settlement of $787.5 million.
Does Business Insurance Cover Defamation or Slander?
Some types of commercial insurance, such as a general liability or professional liability policy, will often provide defamation coverage. This may include hiring an attorney, paying for court costs and potentially paying damages or a settlement if the judge rules in favor of the plaintiff.
It's important to note that most carriers will exclude intentional acts of defamation, such as when an employee knowingly makes false statements about someone with the intent to harm their reputation. If your insurer finds out this is the case, they may deny your claim and you may have to deal with the fallout yourself.
What Type of Insurance Policy Do I Need to Cover Defamation?
There are several defamation insurance types that can help protect your business, which we’ve listed below.
In a general liability insurance policy, there are typically two main types of coverage for claims: coverage A, which covers bodily injury and property damage and coverage B, which covers personal and advertising injury, libel and slander. For defamation claims, coverage B is what will protect you.
For example, if your business is accused of making false statements about a competitor in your advertising or marketing materials, coverage B may kick in to cover the cost of defending against a defamation lawsuit.
An example would be if a successful blogger with a large following writes a story stating that the local deli sells cat and dog meat as chicken and beef. The locals decide not to shop there and the FDA gets involved. The negative publicity causes the deli to shut down. The story, however, turns out to be false and the owner of the delicatessen sues the blogger for defamation. The blogger can file a claim with their professional liability policy to help cover court costs.
Cyber Liability Insurance
Cyber liability insurance can potentially protect your business against defamation claims but only if you add multimedia liability coverage. However, unlike media liability coverage mentioned above, multimedia liability coverage will generally only cover slander claims (spoken statements) and not always libel (written statements).
So, if an online publication publishes a false story about Sony stealing technology from Microsoft to create their newest gaming console, a cyber liability insurance policy may not cover this type of defamation suit. However, if the false claim was spoken in an interview, then the claim may be accepted.
When you purchase an umbrella insurance plan, it provides coverage that goes above and beyond the limits of your underlying liability policies, such as your general liability insurance or professional liability insurance. This means that if a claim exceeds the limits of your general liability insurance policy, your umbrella insurance policy may kick in to cover the excess costs.
For example, let's say your general liability insurance policy has a limit of $1 million for personal and advertising injury coverage. If you are sued for defamation and the damages are awarded for $2 million, your general liability insurance policy would cover the first $1 million and your umbrella insurance policy would cover the remaining $1 million.
How Can My Business Avoid a Defamation Lawsuit?
Avoiding defamation claims is easier than it looks and starts with sticking to the facts. Only make statements that you can back up with reliable and verifiable evidence or that are widely known to be true.
Do your best to remain objective by avoiding expressing personal opinions or making subjective statements that could be interpreted as defamatory. If expressing opinions is in your line of work — you’re a political commentator, for instance — stick to opinion-centric language. Use “In my opinion,” or “It would seem,” when making verbal or written statements.
Be mindful of your audience, as well. Consider the potential impact of your statements on your target audience and avoid making comments that could be seen as harmful or offensive. Essentially, be respectful and don't make personal attacks.
How To Get Coverage for Defamation and Slander
If you want coverage for defamation and slander, check your existing insurance policies as you may already be covered. You can either look at a copy of your policy or you can contact your insurance agent to see if your policy has such coverage.
There is also the option of purchasing a defamation insurance plan (see above for options) if you don’t have adequate insurance. An insurance broker can help you understand your options and find the best policy to fit your needs.