Tech Company Advertising Injury Coverage

Why it’s necessary

The standard General Liability policy covers personal injury and advertising injury unless the insured is in the business of advertising, broadcasting, publishing, or telecasting. For this reason, there is no coverage for IT firms that are in the business of designing websites, determining content, providing content, or providing internet access.

Advertising InjuryWhy do tech firms need personal injury coverage? Coverage may be needed to against an allegation of slander, libel, or oral or written publication that violates a person’s right of privacy. It is not too difficult to see how a tech firm could get sued under these circumstances. Coverage may also be needed for advertisement injury to protect against allegation of infringement of copyright, trade dress, or slogan in your advertisement. The key word is advertisement. There is no coverage for infringement of copyright, trade mark, trade dress, or slogan unless they occur in an advertisement.

What’s not covered

An exclusion in the policy form eliminates coverage for injury arising out of electronic chat rooms or bulletin boards that the insured hosts, owns, or exercises control over. In addition, there is an exclusion arising out of the unauthorized use of another’s name or product in your email address, domain name, meta tag, or similar tactic used to mislead the someone else’s potential customers.

It is obvious that the standard General Liability form does not adequately protect tech companies or IT professionals against these important exposures. As a result, coverage can be sought as part of a Professional Liability or Errors & Omissions policy form. These policies can add essential coverages for tech firms in the business of advertising or publishing and violation of a person’s right of privacy or undue publicity, intellectual property infringements, etc.

It is strongly recommended that tech companies or IT professionals deal with a tech insurance specialist to make sure that their coverage needs are addressed.

 

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Categories: Advertising Injury, Errors & Ommissions, Personal / Advertising Injury, Professional Liability, Technology

A Negative Customer Review Could Cost You Your House or Business!

They could cost you your house or business

We have all had at least one unsatisfactory experience with a company or contractor. When emotions run high and you’ve reached your boiling point, it is hard to refrain from sticking it to the service provider with a negative review on sights like Yelp or Angie’s List. Letting others hate-yelpknow about your bad experience is fine, but be careful how you word your next review. It could land you a lawsuit.

“Most people don’t know the legal nuances of how to write negative reviews without making defamatory statements,” says Eric Goldman, co-director of the High Tech Law Institute at Santa Clara University Law School.

“Every time people post negative online reviews, they are betting their houses – in the sense that the criticized business can sue them and try to take their house.”  – Eric Goldman

With more than 30 million user reviews posted on Yelp, businesses are starting to use the law to fight defamation, lost reputation, and lost business due to slanderous customer reviews.

Perez vs. Dietz

This all started in Virginia when homeowner Jane Perez posted a negative customer review against contractor Christopher Dietz in the fall of 2012. Perez’s comments accused Dietz of stealing her jewelry and charging her for work that was never done. Dietz filed a lawsuit accusing Perez of defamation and slander.

The judge in the case ruled that portions of the Perez’s review had to be removed from the web.

This case went to the Virginia Supreme Court, where the ruling was overturned. The Supreme Court sided with Perez, ruling that her negative customer review was considered a freedom of speech right under the First Amendment. This ruling set the case back to the original judge who can set a trial date.

These litigation proceedings are important because they can determine the fate of Internet discussions, including if a contractor or company has a right to protection against slanderous reviews or if customers are within their right to free speech.

How to protect your business

One of the best ways to protect your business from negative reviews is by due diligence. Libel, slanderProtect your business by making sure you are covered for personal injury in your General Liability or Professional Liability insurance policies.

Other ways to prevent a negative review is to create a work environment tailored to customer satisfaction. Ask the customer what you can improve on, and settle conflicts diplomatically with witnesses and document both parties” agreements.

If you do get a negative review, respond in a private message or phone call. The reviewer will likely be surprised you contacted them, embarrassed that they were so harsh, and understanding – and even forgiving  – of any lapses in your customer satisfaction. Most of those providing negative reviews just want to be heard. Offer and an apology and offer to fix problem.

How to protect yourself

If you find yourself wanting to write a negative review, follow these tips to protect yourself from being sued:

  • Focus on the facts
  • Share personal experiences
  • Avoid making broad statements
  • Be specific (Ex.: bad customer service, too expensive, poorly finished product)

Example of a defamatory review:

Everyone at ABC Business is an incompetent, blubbering, fool! It took them a week to do one simple task and when they were finally finished it was done WRONG! To top it off they charged me extra! Do not go to these guys. They are horrible!

Example of a well-written review:

I was not pleased with the customer service or prices at ABC Business. It took a week for my project to be completed where I have had this type of project completed in less than two days at XYZ Business. I was also surprised by the cost. I paid $50 more at ABC Business to do the same project that XYZ Business did for me in the past.

Example of a business response to a negative review:

I am sorry, Unhappy Customer. We understand that our completion of your project did take longer than normal. This was because of the holidays when our staff take vacations and the workflow increases. We apologize for inconveniencing you. I also wanted to address our cost. We have to charge more for our services because we use special ink that does not run and special paper that never crinkles to give our customers the best finished project possible. We would like to compensate you for the delay you experienced by giving you a coupon for 15% off your next project or purchase at ABC Business. We appreciate your business. .

Source: Insurance Journal, “Consumers Posting Negative Reviews Could Face Legal Issues,” Mitch Lipka, January 7, 2013

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Categories: Personal / Advertising Injury

Protection Against Cyberbullying

Is denial of coverage a possibility?

As cyberbullying increases, so do the concerns of whether injuries resulting from these harassments or threats will be covered Cyberbullyunder Homeowner or Personal Umbrella policies. Parents are typically not aware of these activities by their children until legal action is taken. Defending against such action can result in the loss of savings, personal effects, and even homes.

The injuries that result from cyberbullying may or may not be covered under a personal insurance policy based on state and individual policy forms. Typical injuries that occur are emotional distress, apprehension, fear, and mental injury, all of which may or may not be considered bodily injury as defined in a Homeowners policy. Bodily injury is usually defined as physical bodily harm such as a broken bone. However, some states define bodily injury to include emotional distress.

Making sure you’re protected

Personal injury liability could provide coverage for allegations of slander, libel, or invasion of privacy, but it’s not automatically included in a Homeowners policy. Purchasing a separate Umbrella policy or adding an endorsement to a Homeowners policy could add this coverage. Also be aware that there is an exclusion for statements that arise out of oral or written publication under the direction of or by an insured with knowledge of its inaccuracy or knowing that the act would violate the rights of others.

The best step you can take to reduce your risk

In the event that emotional distress, anxiety or mental injury is not classified as bodily injury, insureds are not likely to have protection against legal costs under their personal insurance policies. In order to reduce the risk in losing assets, time, expense, and aggravation of legal action arising from cyberbullying, parents should use precautions when their children use electronic devices.

Source: Rough Notes; Donald S. Malecki; July 2012

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Categories: Loss Control, Personal / Advertising Injury, Risk Management

Fax Blast Class Action Lawsuits

In the Florida Supreme Court case of Penzer v. Transportation Insurance Company, the court ruled that the standard General Liability policy form covers lawsuits alleging that fax blasts are in violation of the federal Telephone Consumer Protection Fax machineAct (TCPA).

In this case, a class action lawsuit was filed against Nextel (or its agent) for sending unsolicited fax blasts in violation of the TCPA. The TCPA is a federal law making it unlawful to use a fax, computer or other device to send an unsolicited advertisement to a fax machine. Each fax sent in violation can result actual damages or $500.

Transportation Insurance Company argued that the advertising injury coverage under its General Liability must be for “oral or written publication of material that violates a person’s right of privacy.” And, in the present case, no private content was communicated in the advertisement.

However, the court opined that the “right of seclusion” is a right of privacy that is provided for under the TCPA. Therefore, the “advertising injury” coverage under the General Liability form does provide coverage for sending unsolicited fax advertisements in violation of the TCPA.

In the Penzer case, the fax blast violation occurred in 2003. Since that time, the insurance industry has adopted form CG 00 67 03 05 entitled “Exclusion-Violation of Statutes that Govern E-Mails, Fax, Phone Calls or Other Methods of Sending Material or Information.” This policy endorsement should preclude coverage in the majority of these cases.

Source: John Sadler

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Categories: General Liability, Personal / Advertising Injury