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Term: Advertising Injury Coverage

15 Mar 2015

A component of commercial general liability insurance that protects the policyholder against claims of stolen ideas, invasion of privacy, libel, slander and copyright infringement related to advertising. Advertising injury coverage is a type of personal injury insurance (as opposed to physical injury insurance) and may also be called “personal and advertising injury coverage.”

Suppose a disgruntled lawyer leaves the law firm he is employed by and decides to start his own firm. His new firm takes out a billboard, and the billboard uses font and colour for its text that are nearly identical to those of the lawyer’s former employer. The former employer sues this disgruntled lawyer for advertising injury and demands that the billboard be taken down within 48 hours.

The lawyer’s new firm doesn’t have the financial resources to defend itself against this claim or to pay a judgement if found guilty in court. Fortunately, he had the foresight to purchase a general liability insurance policy that contained advertising injury coverage, so he can use his insurance policy to fight the lawsuit. Unfortunately, because this unhappy lawyer intentionally violated his former employer’s trademark, his policy doesn’t cover him and he has to defend himself with his own resources or find a way to settle inexpensively.

Advertising injury coverage also does not cover false advertising, so if the lawyer’s new customers sued him because his billboard led them to believe his new firm was somehow related to his old firm, his insurance wouldn’t cover him.

Another scenario where advertising injury coverage would come into play is if a major car manufacturer, through its television ads, claimed that its competitors’ vehicles used faulty brake systems and the competitor sued for slander, saying that the claims about faulty brakes were false. The car manufacturer could rely on its advertising injury coverage to defend itself in court, assuming its claims were based on accurate information and were not excluded from the policy’s coverage in any way.

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