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Gawker Suit Illustrates Difference between General Liability and Professional Liability Policies

13. August 2014 07:37

two men comparing apples and oranges

According to PandoDaily, a self-declared site-of-record for startups, celebrity gossip site Gawker is in a bit of a bind. Apparently, Hulk Hogan sued the media company for $100 million for posting a video of him in a compromising position with a friend’s wife. Hogan cited invasion of privacy and emotional distress as the reasons for the claim.

And because Gawker is no stranger to publishing gossip, this particular lawsuit isn’t the most interesting part of this story. But the part about Gawker being sued by its insurance company, Nautilus? Now that’s interesting.

Gawker reportedly filed a claim with the accident liability insurance company to cover its legal costs during the Hogan lawsuit, and now Nautilus attests the policy wasn’t intended to cover such a lawsuit. Here’s how the weird fiasco came to be, according to sources:

Now, don’t get us wrong. Gawker probably wasn’t purposefully trying to commit insurance fraud. Maybe it just didn’t know what the insurance did and didn’t cover – an easy mistake to make when you consider the amount of legalese in any given policy.

Unfortunately, good intentions won’t save a business in the throes of legal trouble. And the cost of the mix-up may be twofold for the media company. Not only will Gawker have to pay for its own legal costs in the Hogan lawsuit ($100 million is a hit for any company) – it might also have to pay back the insurance company.

When It Comes to Insurance Coverage, Context Is Everything

For those of you already familiar with General Liability Insurance, you may be scratching your head over this case. After all, this policy usually includes advertising injury coverage that can cover lawsuits over invading someone’s privacy and the emotional distress that comes with it. (To learn more about advertising injuries and how to avoid them, check out our eBook Tweet or Twibel: The Small-Business Owner's Guide to Advertising Injury.)

So why wasn’t this policy enough for Gawker’s situation?

The simple answer is that Gawker didn’t use the lurid video of the pro wrestler to advertise its business. Instead, it was simply publishing click-worthy content, which is the nature of the media company’s work.

That’s why the Hogan lawsuit is more an issue that a Professional Liability Insurance policy would cover. This policy covers legal expenses when a business is sued for making mistakes in its work.

Arguably, given Gawker’s industry, it should have reasonably known publishing someone’s private video without permission is an invasion of privacy. So the case is more a matter of professional negligence than an advertising mistake.

Keeping General Liability and Professional Liability Policies Straight

It’s true – there seems to be a lot of overlap between General Liability Insurance and Professional Liability Insurance. But knowing the difference between the policies can spare you a lot of headaches and ensure your business has the appropriate coverage when it needs it.

Essentially, keep in mind that General Liability Insurance covers lawsuits over…

On the other hand, Professional Liability Insurance covers lawsuits related to your work. This includes allegations that your business…

You can learn more about the similarities and differences between these two policies in our article “General Liability Insurance vs. Professional Liability Insurance.” And if you have more questions about how these policies protect your small business, feel free to contact an insureon agent.

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