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Court Ruling Extends Definition of Advertising Injury for General Liability Policies

14. April 2015 08:05

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According to the National Law Review, a recent ruling out of Illinois recognized that product displays could trigger a General Liability Insurance policy's advertising injury coverage. Here's what happened:

So why is this good news for small-business owners? In short, if you rely on product displays or window signs to draw consumers to your door, this case shows that you could face an advertising injury lawsuit over them. This case sets a precedent for interpreting retail displays as a form of advertising, and moreover, it sets a precedent for General Liability Insurance covering a lawsuit over these displays.

This stuff is complicated, so let's review what constitutes as advertising and how advertising injuries affect your business.

First Things First: What Counts as Advertising?

General Liability Insurance forms typically define advertising as any public notice that attracts customers or supporters to your business. That means the following can be considered forms of advertisement:

The Illinois court ruled that for the purposes of advertising injury coverage, this definition could include product displays, such as placards that announce to the public the kinds of products sold inside the store. However, the following may not count as advertising:

The idea is that simply displaying what you sell isn't advertising. The announcements that accompany those items, however, can be considered a form of advertising.

Why Definitions Matter When it Comes to Insurance Coverage

As you know, insurance policies are legal documents, so the language is precise. If it weren't, there would be too many loopholes and the policy would be impossible to enforce.

When a court interprets a policy's key words, it can fundamentally change the scope of coverage. And that's what happened in the case above. In Illinois, placards in store displays can be considered a form of advertising, and that means businesses can be sued if those store displays cause another person or entity harm in the form of:

These "wrongs" are advertising injuries, and they are surprisingly easy to commit, especially if your business does social media marketing. For example, if you post photos that don't belong to you on your business's Instagram account, you could be sued for copyright infringement, invasion of privacy, or misappropriation, depending on the image.

A competitor can also allege your store's placard uses images of their products. If they sue you over copyright infringement, your General Liability Insurance may provide coverage for your legal defense fees, judgments or settlements, and other court costs.

For an in-depth explanation of advertising injuries and how to avoid them, be sure to check out our free guide Tweet or Twibel: The Small-Business Owner's Guide to Advertising Injury.

Tags:

Advertising Injury | General Liability Insurance | Insurance Terms Explained | Small Business Risk Management | Tips for All Small Businesses

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