Every general liability policy includes a medical expenses section. What exactly does this section cover? As it has been established, general liability coverage is when a third-party claims you or your law firm was negligent for bodily injury or property damage and sues for those damages. General liability protects your law firm against incidents that may occur on your premises or at other covered locations where you normally conduct business. When you look at the declarations pages on your commercial general liability policy, it looks like this:
LIMITS OF INSURANCE
LIABILITY AND MEDICAL EXPENSES
MEDICAL EXPENSES – ANY ONE PERSON
PERSONAL AND ADVERTISING INJURY
DAMAGES TO PREMISES RENTED TO YOU
PRODUCTS-COMPLETED OPERATIONS AGGREGATE
Law firms often wonder what this coverage entails. Do they sometimes ask why this limit is so low in comparison to the other limits listed? “Medical expenses are costly; why only $10,000 limits here?” The answer to this question is, where liability coverage is for situations where a third-party claims your negligence for bodily injury or property damage, the medical payments coverage is an exception, as it pays medical expenses for bodily injury to third parties as a result of your operations regardless of fault.
People are less likely to sue you if they receive prompt medical payments to cover the costs of any injuries they have sustained, for which they could claim your law firm is liable. Medical Payments coverage gets them without filing a lawsuit or going to court and engaging in a lengthy claims process. This coverage also allows your insurer to pay small nuisance claims without the need for costly legal expenses.
If a liability claim and medical costs are paid, but a lawsuit still arises, general liability will still protect for a covered claim. The purpose of medical expense coverage, however, is to prevent this from happening.
What is personal and advertising injury coverage?
Included on every general liability insurance policy for law firms is a coverage entitled “Personal and Advertising Injury.” The problem is that very few people understand what this coverage is and how it can protect your company.
Personal and Advertising Injury is Limited in Scope
First, Personal and Advertising Injury (Coverage B) is much narrower in scope than your Bodily Injury and Property Damage (coverage A) portion of your general liability insurance. The latter is quite broad. It covers virtually any claim or suit for bodily injury or property damage caused by an occurrence, as long as the claim is not subject to an exclusion. Personal and Advertising Injury applies only to claims that result from the specific offenses included in the definition of a claim.
Covers Intentional Acts, Not Intentional Injury
Another difference between Coverage B and Coverage A has to do with the types of covered acts. Coverage A applies to bodily injury or property damage caused by an occurrence that results from your negligence. Negligence is a type of tort (civil wrong) committed unintentionally, meaning the accident occurred because you failed to exercise reasonable care, not because of something you did intentionally.
Coverage B, on the other hand, covers intentional torts. Intentional torts include acts like libel, slander, and false arrest. They are called intentional torts because they arise out of intentional acts.
Suppose you own an apartment building. Tim, one of your tenants, has been acting suspiciously, and you fear he may be conducting a drug-making operation.
One day while Tim is out, you enter his apartment (an intentional act) to look for drugs. Tim learns that you were in his apartment without his permission and sues you for wrongful entry. Wrongful entry is an intentional tort that is covered under Coverage B.
Coverage B applies to intentional acts that result in unintentional injury. It does not cover injury that you inflict on someone deliberately.
Requirements for Coverage
To be covered under Coverage B, a claim must seek damages for personal and advertising injury caused by an offense that arises from your business. The offense must be committed in the coverage territory and during the policy period. Moreover, no coverage is afforded for an offense that arises from the material you published before the policy period.
Coverage B excludes claims arising from any of the following:
Knowing Violation of Rights Injury you inflict on someone intentionally. No coverage is provided for an offense if you knew, when you committed it, that it would violate someone’s rights and cause injury.
Publication With Knowledge of Falsity False statements you published verbally or in writing if you knew they were false when you published them.
Contractual Liability Liability for personal and advertising injury that you assume on behalf of someone else under a contract.
Breach of Contract Your failure to adhere to the terms of a contract. Coverage is afforded for breach of an implied contract to use someone else’s advertising idea in your advertisement.
Statements About Price or Quality False statements you make in an advertisement about your product or service’s price or quality. For instance, suppose you publish an ad stating that your business, Best Buns, uses 100% organic ingredients in all of its products. If a customer sues you because the muffin she bought from you contains no organic ingredients, the claim will not be covered.
Intellectual Property Your breach of someone else’s copyright, patent, trademark, or trade secret. An exception to this exclusion is an infringement (in your advertisement) of someone else’s copyright, trade dress, or slogan. Such infringement is included in the definition of personal and advertising injury.
Chatrooms, Bulletin Boards, Unauthorized Use Your Internet chatrooms or bulletin boards, or your unauthorized use of someone’s email address or domain name.
War, Pollution, Certain Laws War, pollution, and violations of the Telephone Consumer Protection Act and the CAN-SPAM Act. The TCPA prohibits certain marketing solicitations via telephone or fax. The CAN-SPAM Act applies to unsolicited emails.
Your policy may contain other exclusions besides the ones listed above.
Personal and advertising injury is subject to a limit that applies to “each person or organization.” This limit is the most the insurer will pay for all damages assessed against any one person or company. Damages or settlements paid under Coverage B are also subject to the General Aggregate limit in the policy.
If you are sued for an offense covered under personal and advertising injury liability, your insurer will defend you. The costs related to your defense will not reduce the limits cited above. In other words, your defense costs will be paid in addition to the limits.