How defamation insurance protects your small business from libel or slander lawsuits

Insureon staff
Even if a slander or libel lawsuit is unfounded, legal fees add up quickly. Here’s how defamation insurance protects your business.
Shocked woman reading defamatory social post on phone.

Whether you run a one-person company or employ hundreds, your small business could someday face a defamation lawsuit.

You and your employees most likely use social media regularly to advertise your business, communicate with customers, and monitor your critics and competitors. If you or one of your employees writes or says something false or defamatory about someone, you could be accused of libel or slander and wind up in court.

Because so many people can see what you post, your risk of a defamation lawsuit may be higher than you think.

Even if an accusation is untrue, your business will end up spending a lot of money defending your innocence – unless you have the right business insurance coverage. Luckily, general liability insurance will provide the first line of defense against defamation suits.

What, exactly, is defamation?

Defamation is making a false statement that harms the reputation of another person or business, and comes in two forms – libel and slander. The difference between libel and slander is how the false statement is made:

  • Slander occurs when someone makes a false defamatory statement verbally
  • Libel occurs when someone makes a false defamatory statement in writing

These damaging statements can’t simply be someone’s opinion, though. For a false statement to be considered defamation, it must be presented as fact.

For instance, tweeting that, “the burgers at Big Al’s Diner are gross,” would not be considered defamation, since that’s an opinion. But writing, “Big Al’s Diner puts sawdust in their burgers” could lead to a defamation lawsuit since you’re making a false statement that could harm the restaurant’s reputation.

People often get confused about what’s considered free speech, and when it’s protected by the First Amendment. Your right to free speech only protects you from government censorship, and even then, the right doesn’t apply to making defamatory statements.

Types of defamation: libel versus slander.

How defamation lawsuits happen

Both people and businesses can be accused of defamation. And those lines can often become blurred thanks to business owners and employees using their social media accounts for both work and personal use.

If your employee posts an untrue, harmful statement about a competitor on their personal Facebook page, that competitor could accuse them of defamation. If they think the employee is speaking on behalf of your company, the competitor could sue your business – not just the person who made the statement – to recover damages.

Even if you’re not to blame for hurting someone’s reputation, a defamation lawsuit could cost you a lot of time and money that your small business can’t afford to lose.

Defamation insurance can provide you with the liability protection you need. A commercial general liability insurance policy typically includes this coverage.

Even if you’re not to blame for hurting someone’s reputation, a defamation lawsuit could cost you a lot of time and money that your small business can’t afford to lose.

How general liability insurance protects you

General liability insurance covers common risks for your business – including third-party property damage, third-party personal injury, and advertising injuries like defamation claims, libel, and slander.

If you were sued for defamation, your insurance company would cover all the expenses that come with a lawsuit, including:

  • Legal fees
  • Court costs
  • Settlements and judgments

General liability coverage protects policyholders from any costs that arise due to a defamation lawsuit. It doesn’t matter if you’re at fault – your insurer will cover the costs and protect your business.

Protect your small business with general liability insurance

How to avoid defamation lawsuits

Even if you have the right insurance policy to protect your business from a defamation lawsuit, you should still work to avoid being sued in the first place. After all, lawsuits are stressful and could potentially cause your insurance premiums to go up. Accusations of libel or slander can also damage your reputation.

You’ll want to take a few steps now to help prevent yourself, your company, and your employees from being accused of defamation.

Educate your employees

Teaching your team about defamation can help lower their chances of committing it. New employees should understand that what they say or write could affect them and the company. It’s a good idea to also refresh your staff’s understanding regularly.

Monitor social media

Having clear social media policies for both your company accounts and your staff can help you avoid a potential lawsuit. But it’s not enough to just provide the policy and never check in.

You should have processes to make sure people aren’t posting false statements and to address them if someone ever does. It’s also a good idea to ask employees to include a disclaimer on their personal social profiles explaining that the views expressed are their own, and not made on behalf of their employer.

Use common sense

Don’t say anything critical about another person or business unless you have the facts to prove it. Even then, really consider if this criticism will help your business at all. If you don’t make comments that could damage someone’s reputation, your risk of being sued for defamation will stay low.

If you do post something critical but have the evidence to support what you say, the other party may be less likely to file a lawsuit since your statement has a basis in fact. If they do decide to go through with it, you’ll be much more likely to win the suit if you can show proof that what you said is true.

Even if you take these precautions, there’s still a chance that you and your small business could one day be accused of defamation. If you have the right general liability policy in place, your business will have the protection it needs to withstand a defamation lawsuit.


Complete Insureon’s easy online application today to compare insurance quotes for business insurance from top-rated U.S. carriers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.

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