We received the following question via e-mail and thought it would be useful to post our reply in the forum:
Does the normal D & O coverage and/or errors and omissions policy cover libel from blogging and twittering? Does a business need a special coverage rider?
The question of insurance coverage for defamation and libel through
Internet communication is complex, and depends on the specific form of
policy in question. In all cases, determining the existence of
coverage requires a careful reading of (1) the declarations of coverage
under the policy, including any definitions set forth in the policy,
(2) the exclusions from coverage set forth in the policy, and (3) any
exceptions to the exclusions.
For example, the December 2007 edition of the ISO Properties, Inc., Commercial General Liability Coverage Form ("CGL"), which is generally considered to be a standard form of commercial general liability policy, provides coverage under Section 1, Coverage B for "publishing and advertising injury." "Publishing and advertising injury" is in turn defined in Section V, Paragraph 14 of the policy as:
... injury, including consequential "bodily injury", arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
e. Oral or written publication, in any manner, of material that violates a person's right of privacy;
f. The use of another's advertising idea in your "advertisement"; or
g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".
Thus, at first blush the standard CGL policy would appear to provide
coverage for libel, whether published on the Internet or elsewhere.
However, as stated above it is critical to read the exclusions in an
insurance policy, and several exclusions in Section 2 of Coverage B
apply to the question of Internet defamation:
This insurance does not apply to...
b. Material Published With Knowledge Of Falsity
"Personal and advertising injury" arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity.
j. Insureds In Media And Internet Type Businesses
"Personal and advertising injury" committed by an insured whose business is:
(1) Advertising, broadcasting, publishing or telecasting;
(2) Designing or determining content of websites for others; or
(3) An Internet search, access, content or service provider.
For the purposes of this exclusion, the placing of frames, borders or links, or advertising, for you or others anywhere on the Internet, is not by itself, considered the business of advertising, broadcasting, publishing or telecasting.
k. Electronic Chatrooms Or Bulletin Boards
"Personal and advertising injury" arising out of an electronic chatroom or bulletin board the insured hosts, owns, or over which the insured exercises control.
Therefore, even though the December 2007 CGL policy provides some
coverage for Internet defamation, there is no coverage if the
defamation in question is: (1) published with knowledge of its falsity;
(2) published by an insured in the business of advertising,
broadcasting, publishing or telecasting (not including insureds that
merely use the Internet as part of their marketing efforts); (3)
published by an insured in the business of designing or determining the
content of websites for others; (4) published by an insured that is an
Internet search, content, access or service provider; OR (5)
published on an electronic chatroom or bulletin board hosted, owned or
controlled by the insured.
Many media organizations believe that the standard CGL coverages are inadequate for their business because of these exclusions, and therefore acquire supplemental coverage in the form of a media liability policy. Such a policy usually provides coverage even in the event that the insured is found to have published with knowledge of falsity or "actual malice," and of course includes no exclusion from coverage on the basis that the insured is in the advertising or publishing business. However, even media liability policies sometimes contain exclusions for claims arising out of Internet publications. Most insurers offering media liability policies will offer, for an increased premium, an endorsement that extends coverage to Internet publications and closes this potential gap. See our Legal Guide for more information.
The bottom line is that it is important for a company to conduct a detailed review of the specific policy language at issue rather than assume that they will be covered for particular types of liability. The best way to do this is to obtain a specimen policy from the insurer prior to purchasing insurance and to seek the advice of an attorney with experience in assisting clients to obtain appropriate coverage.