Libel

Libel is a false, written statement presented as fact that causes harm to a person’s or organization’s reputation. For small business owners, libel claims most often arise from online activity—such as websites, social media posts, digital ads, emails, or online reviews—rather than traditional print media. To qualify as libel, the statement typically must:

• Be false, not just misleading or exaggerated
• Be presented as a statement of fact, not an opinion
• Be communicated to a third party (published online, in print, or digitally)
• Cause reputational or financial harm

Understanding libel is important because even unintentional statements can lead to costly lawsuits, legal defense expenses, and reputational damage.

Not all negative statements are libel. Opinions and personal experiences, even harsh ones, are generally protected. For example:

• “I didn’t like the service” is an opinion
• “This company overcharged me” may be a personal experience
• “This business commits fraud” (when untrue) could be libel

Libel involves false statements of fact, not subjective criticism.

Both libel and slander are examples of defamation. Libel involves material that is published or displayed, and then is seen by a third party. Slander is something said verbally to another person.

While the First Amendment forbids the government from punishing people for what they write and publish, it doesn't protect you or your business from defamation claims.

Most libel suits fall under state jurisdiction. State courts follow the common law principles of defamation, which allows a legal cause of action without proof of actual harm. Under U.S. libel laws, simply demonstrating that something is a defamatory statement could be enough to support a liability claim.

Winning special damages from a defamation lawsuit is a different story. In the landmark 1964 case, New York Times Co. v. Sullivan, the U.S. Supreme Court ruled that the First Amendment limits someone's ability to claim damages in matters of public concern. A claimant would have to prove that someone acted with "actual malice" by publishing false statements about public officials.

Yes, many small businesses are protected against libel claims through insurance.

Libel is usually covered under the advertising injury portion of a general liability policy. This coverage can help pay for:

• Legal defense costs
• Settlements or judgments
• Court fees related to libel lawsuits

If your business provides professional advice, consulting, or published expertise (such as IT services, marketing, or consulting), a libel claim related to professional content may involve professional liability insurance. This policy is also referred to as errors and omissions insurance.

While general liability insurance can cover many libel claims, coverage may not apply if:

• The statement was intentionally false
• The claim falls outside your policy’s advertising injury definition
• The activity occurred before your policy start date

Reviewing policy details and exclusions is important to understand exactly how your coverage applies.

Insureon helps small business owners compare commercial insurance quotes with one easy online application. Start an application today to protect your business against legal liabilities.