I want to dedicate this week’s blog post to liability insurance and defamation. If you’re currently studying for the CAIB 3 exam or Fundamentals / CAIB 1 exam, you might recognize these from your CGL and Homeowners Liability sections.
In the legal and insurance context, defamation means a statement that causes unjustified injury to a person’s reputation. Spoken defamation is called slander and written defamation is called libel.
In order for the person suing you to be successful, they must demonstrate 4 things:
- The statement was false. If the statement is true, you are free and clear.
- The statement caused damage to their business (ie. they lost customers because of your statement)
- The statement was communicated to a 3rd party
- The statement was made publicly. You are protected if your statement was privileged information.
With that out of the way, in order for your liability insurance policy to provide coverage, you need to meet these 2 conditions:
- The defamation was committed within the coverage territory and during the policy period. Of course, anything that occurred outside the purview of your policy would not be covered.
- Secondly, your CGL policy would only respond if your defamation arose during a business activity. Similarly, your personal liability policy would only respond if the defamation was committed during a private activity.
I hope this sheds some light on one of the most confusing parts of the textbooks. If you’re looking for some more help, check out our other courses here.