What is Defamation Insurance and is it Really Worth It?

So, someone has just sued you or your company for writing an untrue and unflattering article about their company. So, what now? While you may be tempted to dismiss it, the individual may believe it is worthwhile to pursue legal action and sue you for defamation. Consider Defamation Insurance to help you pay for the process.

Although many people are unaware of it, defamation insurance can provide coverage to people who are sued for defamation in these situations.

Notably, defamation insurance does not cover damages if you are the target of a defamatory online attack. It only protects you if you or your company is sued for publishing allegedly defamatory information.

If you want to learn more about defamation insurance, this post will provide you with some basic information.

Understanding Defamation?

Before we get into defamation insurance, let’s define defamation.

When someone makes a false or harmful statement about another person, this is referred to as defamation. There are two types of defamation: libel and slander.

A false statement made by one person about another is defined as defamation. The false statement must be hurtful and cause harm to the other party in order to qualify as defamation.

To establish defamation, a person must demonstrate all of the following:

• The assertion about him or her was false
• Inflicted harm on him or her in some way
• Is disclosed to a third party; and
• The statement is not protected

A statement is defamatory if it tends to harm another person’s reputation, lowering him or her in the eyes of the community. Alternatively, it would discourage third parties from associating with or dealing with him or her.

Courts examine writing as a whole, not just the language alleged to be defamatory, to determine if it is defamatory. The publication and its words are examined in the same way that ordinary people would read and comprehend them.

What Is Defamation Insurance, is it Really Worth It?

Defamation insurance covers any false and/or harmful written or oral communication about an individual, organization, or product.

Coverage for Defamation, also known as Personal Injury (PI) insurance, can provide financial protection for companies or individuals who need to pay for damage control regarding their reputation, public profile, and credibility.

It only takes one article to completely demolish someone’s reputation. This is why defamation insurance is important because action must be taken quickly to correct any potential misinformation or wrongdoing.

Who Needs Insurance Against Defamation?

Libel and slander accusations can be difficult to prove and have serious consequences. Acts of Defamation are typically committed against the following individuals or entities:

• Business or organization
• High-profile individual, like a politician or celebrity
• Product or produce

Some defamatory acts may have more serious consequences than others. False claims about a product’s efficiency, for example, are more easily debunked than an accusation of a historical criminal act.

However, if the publication of an incorrect statement can result in significant financial harm to a brand or the reputation of a company or individual, defamation coverage is required.

What Is Insurance Defamation Covered For?

Defamation insurance can provide coverage for the following:

• Libel and slander
• Reparation costs
• Legal expenses
• Medical expenses

Defamation insurance can provide coverage for the following:

• False imprisonment
• Wrongful eviction
• Invasion of privacy
• Malicious prosecution

Defamation insurance covers not only the costs of reversing the situation but also the costs of restoring the injured party’s innocence, as well as any additional costs and expenses incurred as a result of the situation.

What Isn’t Covered by Defamation Insurance?

Despite the fact that defamation coverage is available as an add-on or extension to some insurance policies, some areas may not be covered.

Make certain that libellous statements published online are not excluded as the insurance industry tries to catch up with technology. With the rise of social media, a wide range of libellous comments have been made, which can be quickly removed. While there are insurance packages available for online slander, make sure that there is no gap in coverage if it is specifically required.

Other prohibited areas for acts of defamation include:

• A libellous or slanderous statement about the same/owned company
• A maliciously false remark or statement that defames someone else
• Policies that were not in effect at the time the comment was made or written

What Kinds of Insurance Cover Defamation Claims?

Most people have some kind of insurance policy, such as auto insurance or homeowner’s coverage. Unfortunately, unless specifically purchased, most insurance policies do not cover defamation claims.

Homeowner’s insurance policies typically allow for “excess liability” coverage, which is a policy issued to provide additional limits in addition to primary liability policies. Consider excess liability coverage to be insurance on your insurance or an umbrella policy that provides additional coverage if your primary policy fails to cover something.

For example, if you have “excess liability” insurance and are facing a defamation claim, you may be able to have your defence costs or even a portion of the settlement amount covered.

Defamation insurance only applies to parties who acted in good faith or unknowingly, not to parties who published material they knew to be false or who published such information recklessly. This is confirmed by the “knowledge of falsity” exclusion, which prevents parties from relying on coverage if they acted maliciously or recklessly.

Furthermore, if you own a business and make defamatory statements about a competing business or contractor, you would be barred from defamation coverage under a “business activities” exclusion, because the statements were made for financial gain.

How can professional indemnity insurance protect your business against defamation?

If unfounded claims are made against a third party, any business, no matter how large or small, risk being sued for libel or slander. Whatever activities your company engages in, could be destroyed by legal fees and fines as a result of a defamation case. Professional indemnity insurance can cover legal fees associated with defending your company against a defamation claim, as well as compensation payments to the claimant.

How Much Does Defamation Insurance Cost?

Each individual insurance policy will specify whether and how defamation is covered as part of a comprehensive package. The cost will be either included in the overall package or calculated as an extended cover amount based on the size of the company, the potential impact of a libellous act, and an estimated loss that can afford to be covered.

Defenses to Defamation

Many people post potentially defamatory things on the internet. However, just because someone posts something that others disagree with or find offensive does not mean they will win a defamation case.

While defamation laws are intended to protect people from false and damaging statements, they also protect free speech. If a person is sued for defamation, he or she may be able to avoid liability if he or she can demonstrate any of the following privileges or defences:

• The statement is true
• It is made with the other party’s permission
• The statement is privileged; or
• The information is communicated by accident

Significantly, these defences are potent weapons with the potential to effectively end a defamation case. As a result, if you are facing a defamation lawsuit, insurance coverage may assist in reimbursing or covering the costs of hiring a lawyer to use these defences.

FAQs about Defamation Insurance