Most of our experience with the commercial
general liability (CGL) policy is with bodily injury or property damage claims.
It is relatively easy to understand why liability may be imposed when someone
receives an unexpected bump on the head or when their property is ruined by
& Stanovich Risk Managers, LLC
In other words, most claims involve physical harm to a person or their property.
But what of allegations by a person or organization that certain legally protected
rights have been violated which do not involve bodily harm or physical injury
to tangible property? No coverage? Enter Coverage B—Personal and Advertising
Injury Liability Insurance.
For quite some time now, the standard Insurance Services Office, Inc. (ISO),
CGL policy has included under Section I of the policy an entirely independent insuring agreement—Coverage
B—Personal and Advertising Injury Liability. Not only does the Coverage B insuring
agreement stand alone, 14 exclusions apply only to personal and advertising
But before we allow personal and advertising injury liability coverage to
overpower the rest of the CGL, it is important to recognize that most other
sections of the policy apply equally to Coverage B and Coverage A—bodily injury
and property damage liability. For example, supplementary payments apply to
both coverages, which is apparent from the supplementary payments title. Those
persons or organizations with the status of insured under Section II—Who Is
an Insured are also protected for personal and advertising injury liability
claims covered by the CGL. Section III—Limits of Insurance addresses Coverage
B: the CGL has a separate limit for personal
and advertising injury claims (the limit applies to any one person or organization),
but any claim paid under Coverage B will result in a reduction of the policy's
general aggregate limit. Finally, Section IV—Commercial General Liability Conditions
also applies to Coverage B.
While Coverage B is independent and stands alone within the CGL policy, it
is helpful to understand the promise of coverage is arranged in a manner similar
to Coverage A.
The insurer promises to pay sums the insured is legally obligated to pay
as damages because of personal and advertising injury. Similar to Coverage A,
the insurer has the duty to defend (and right to defend) a suit seeking damages
under this coverage; but there is no duty to defend when the insurance does
not apply or when the applicable limit has been exhausted due to payment of
judgments or settlements. Of course, the insurer expressly reserves the right,
at its discretion, to investigate and settle any Coverage B claim or suit—even
if the policyholder does not agree to the settlement.
In an "occurrence" CGL policy, the offense (that is the alleged act that
caused the injury resulting in the damages being claimed—such as false arrest)
must be committed during the policy period; in a "claims-made" CGL policy, the
claim for damages resulting from the offense must be made during the policy
period, provided the offense itself was committed after the claims-made policy's
retroactive date (if any).
To summarize, as long as the claim is for a covered personal or advertising
injury offense, Coverage B responds much the same as Coverage A.
The intangible and legalistic nature of claims involving personal or advertising
injury leaves many struggling to grasp what Coverage B is about. The difficulty
in understanding the nature of a personal injury claim is further exacerbated
by the legal community's use of the term "personal injury" to describe what
the insurance industry has elected to call "bodily injury." Nonetheless, as
explained in more detail below, an act that somehow violates or infringes on
the rights of others, referred to in the policy as an offense, is the subject
of personal and advertising injury liability coverage.
For the most part, Coverage B claims involve intentional acts. That is, a
person or organization alleged to have committed a personal or advertising injury
offense usually intended their actions (but not necessarily the result of their
actions). This concept is central to understanding personal and advertising
injury claims—and is thus a factor that distinguishes it from Coverage A—Bodily
Injury or Property Damage Liability claims. For Coverage A to apply, bodily
injury and property damage must be caused by an "occurrence," which means, at
minimum, an accident.
The term "occurrence" is irrelevant to Coverage B—it does not appear in the
Coverage B insuring agreement or in the application of Coverage B limits. In
other words, whether the claim is considered an "occurrence" or accident is
not to be considered when determining whether an offense falls within the personal
and advertising injury liability insuring agreement. That is not to say that
the knowing violation of the rights of others will always be covered. But it
is the Coverage B exclusions and not the insuring agreement that address the
scope of coverage for intentional acts. Part 2 of this article will discuss
the exclusions applicable to Coverage B—Personal and Advertising Injury Liability
Possibly the easiest way to think, at least in the abstract, about personal
and advertising injury claims is to remember that persons and organizations
have legally protected rights that, if violated or infringed, may result in
loss to them. The law often provides a remedy to those who suffer such loss—they
may seek damages as compensation in a court of law from the person or organization
alleged to have caused the loss.
Persons or organizations have numerous legally protected rights that arise
from countless sources—including common law, statute, state constitutions, and
the U.S. Constitution. Coverage B of the CGL policy does not attempt to protect
an insured from violating all the rights of another; coverage is limited to specifically
listed acts of an insured.
For an act to be considered a personal and advertising injury offense, the
act must fall within the policy definition of personal and advertising injury.
Put another way, if the allegations do not fall within the definition of personal
and advertising liability, they are not covered by Coverage B of the CGL. Some
have described this as analogous to a "named peril" approach to coverage: the
burden of demonstrating the possibility that an allegation falls within the
definition of personal and advertising injury falls on the insured demanding
protection. If the insured cannot meet this burden, the insurer generally has
no obligation to respond.
Here is where Coverage B becomes difficult to understand—the definition of
personal and advertising injury includes terminology that is quite legalistic.
To determine whether an act committed by an insured falls within the seven listed
offenses requires at least a basic understanding of rights being protected and
what constitutes infringement or violation of such rights. The Coverage B exclusions
applicable to the listed offenses, which will be discussed in Part 2 of this
article, also have some of the same characteristics—the exclusions contain terms
that have legal definitions (such as copyright, trademark, etc.) not included
within the policy.
For Coverage B to apply, the offense must arise out of the business of the
named insured. Further, if the claimant alleges bodily injury as a consequence of a covered offense, Coverage
B will pay damages arising out of the consequential bodily injury. For example,
while being wrongly detained for shoplifting, a customer of a department store
suffers a heart attack. Personal and advertising injury coverage will respond
to the damages for not only the wrongful detention but also the resulting physical
harm (heart attack).
Providing the precise legal elements that are necessary for each offense
is beyond what is intended by this article. Instead, what follows is a generic
description to help promote a basic understanding of Coverage B. The descriptions
of the offenses listed are summaries taken in part from certain definitions
found in Black's Law Dictionary (8th ed.).
Here the offense involves unjustified forcible restraint (arrest) or keeping
a person against their will (detention). Imprisonment usually implies the detention
is in prison. The offense is based largely on the deprivation of a person's
right to liberty.
The actual range of this offense is considerable—it has been found in circumstances
where a gas station attendant drained the water from the radiator of a person's
car with the intent of keeping the person from leaving. Another case involved
a practical joke in which an athlete's clothing was taken when he was in the
shower, depriving him of the opportunity to leave the premises.
This offense involves the instituting of legal proceedings, either criminal
or civil, against another without probable cause or proper cause. Malice is
required (ill will is the motivation) and the proceeding must end favorably
for the defendant. The successful defendant has this cause of action against
the person or organization that wrongfully started the legal proceeding; the
person or organization that brought the action (who now is a defendant in the
malicious prosecution case) is covered by their CGL, subject to exclusions.
Wrongly expelling a person from their premises, wrongly entering their premises,
or otherwise invading or preventing the private right to occupy their premises
(including a room or dwelling) is the essence of this offense. Insurers generally
take the position that these offenses are covered only if the eviction, entry,
or invasion of the right of private occupancy is committed by the owner, landlord,
or lessor. Exactly what is "wrongful" or an "invasion" is a matter of both fact
and law that has to be considered in any claim scenario.
Invasion of the right of private occupancy was found when a hotel provided
entry into a hotel room for a male business traveler that was already occupied
by a female business traveler, who met the startled new occupant as she exited
her shower. The hotel was found to have invaded the female business traveler's
right to private occupancy.
The issue that is central to this offense is defamation: harm to a person's
reputation resulting from a false statement. Slander is defamation by speech;
libel is defamation in written or visual form. Disparagement is similar to defamation,
but involves a comparison that detracts or discredits the goods, products, or
services of another because of false statements.
Publication is a critical element to defamation or disparagement, and simply
means that the false statements (either by speech, written or visual) have been
made to third parties other than the person or organization whose reputation,
goods, products, or services are allegedly harmed.
The concern of privacy continues to grow. Keeping secure medical records,
financial information, and social security numbers, to name but a few, are major
duties and concerns for both public and private organizations nationwide. The
right of privacy (and the invasion of that right) is well established in common
law. The following are four well recognized categories as respects invasion
Found to be an invasion of privacy, specifically intrusion into private affairs,
was unauthorized wiretapping and eavesdropping conducted by a large corporation
against a critic and author who was preparing to release a book severely critical
of the corporation's products.
To be covered, the last two offenses must be contained within the named insured's
"advertisement," a term defined in the CGL policy. Advertisement is a notice
broadcast or published to the general public (or specific target markets within
the general public) about the named insured's goods, products, or services.
The purpose of the broadcast or publication must be for the purpose of attracting
customers or supporters. Included in the definition of "advertisement" is material
placed on the Internet as well as websites (but only that part of the website
that is about the named insured's goods, products, or services).
This is straightforward. If another person or organization alleges your organization
is using their advertising ideas in your advertisements, Coverage B is triggered
as this is a covered offense, further subject to the coverage exclusions.
Similar to the above, if the named insured is alleged to have, in their advertising
campaign, infringed on the copyright, trade dress, or slogan of another, coverage
exists under Coverage B, further subject to the coverage exclusions. Trade dress
is a business style or image that is unique or distinctive. For example, a hamburger
store with golden arches would probably be alleged to have infringed on the
trade dress of another.
The following are a couple of real-life examples that might bring to life
some of the legal wrangling that often triggers the offenses included within
the definition of personal and advertising injury liability coverage. This is
not to suggest that the described actions are covered by Coverage B of the CGL
policy, but are simply actions that fall within the rather abstract realm of
violation of the rights of others.
A freelance photographer, Donald Galella, who specialized in photographing
well-known persons, was involved in a lawsuit with Jacqueline Kennedy Onassis,
widow of the late President John F. Kennedy, and at the time wife of Aristotle
Onassis. Mr. Galella was a self-described "paparazzo" (singular for paparazzi—literally,
an annoying insect) who aggressively pursued photographs of the two Kennedy
children, John and Caroline. His conduct included jumping into the path of John
Kennedy riding his bicycle, interrupting Caroline at tennis, and invading their
U.S. Secret Service agents, assigned to protect Ms. Onassis and children,
fearing for the physical safety of the children, ultimately arrested and interrogated
Mr. Galella, who in turn brought an action against Ms. Onassis for false arrest
and malicious prosecution, contending that Ms. Onassis ordered the arrest and
prosecution, which included interference with his trade (a temporary restraining
order was issued against Mr. Galella). After trial, the court dismissed Mr.
Galella's claim and granted relief to Ms. Onassis, finding Mr. Galella to have
engaged in, among other things, harassment, intentional infliction of emotional
distress, and invasion of privacy. While Ms. Onassis was found to be a public
figure, the court commented:
The plaintiff was shopping in a busy self-service department store, when
she picked out a purse but could not find a cashier to wrap the purse for her.
She moved to another aisle within the store, carrying the purse with her. In
hurry to leave, she put the purse back and left the store without making a purchase.
Outside the store, an angry store assistant manager caught up with her, blocked
her path, and ordered her to take off her coat. After removing her coat, the
assistant store manager asked her about the pockets on her dress, actually reaching
into her pockets. Not finding anything, he then took her purse (one she had
with her, not the one from the store) and emptied it out, searching through
her personal items. Again not finding anything, he placed the items back into
her purse, then went back into the store. People on the street had stopped to
watch, much to the embarrassment of the women. The plaintiff brought the suit
against the store, alleging, among other things, slander.
The court found in favor of the plaintiff in the matter of slander. The judge
While the above incidents may be adjudicated differently today, they do give
some insight into the types of behavior that might result in litigation which
makes Coverage B—Personal and Advertising Injury Liability important.
See Part 2 of this article.
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