What is Insurance Defamation?

Even if a slander or libel complaint is frivolous, legal fees can quickly add up. Here’s how defamation insurance may safeguard your company. Your small firm, whether it employs one person or hundreds, could face a defamation action at some point.

Most likely, you and your staff utilize social media on a regular basis to promote your company, engage with consumers, and keep tabs on your critics and competitors.

You or one of your workers could be charged with libel or slander and end up in court if you write or say something false or defamatory about someone.

Because so many people may see what you post, you may be more vulnerable to a defamation case than you realize.

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 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 destructive words, on the other hand, cannot just be someone’s viewpoint. A false statement must be presented as reality in order to be considered defamation.

Defamation is defined as any inaccurate and unfavorable written or oral expression about a person or entity. Defamation lawsuits are often covered by media liability and general liability policies (although general liability policies exclude such coverage for insureds engaged in media businesses).

“The burgers at Big Al’s Diner are terrible,” for example, would not be constituted defamation because it is an opinion. However, stating anything like “Big Al’s Diner uses sawdust in their burgers” could result in a defamation claim because you’re making a false assertion that could hurt 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.

What are the differences between defamation, libel and slander?

Defamation, libel, and slander are crucial terms to understand, yet their definitions are frequently misunderstood. Knowing the distinction can be crucial as a small business owner, sole trader, or freelancer. Defamation has already been defined, but what about libel and slander?

What is the definition of libel?

Libel is a legal term that refers to a written statement that is untrue or defamatory. This could be in the form of a letter, email, social media post, or text message.

What exactly is slander?

A false or defamatory verbal comment is characterized as slander. This could be in the form of a speech or a video on a website or social media outlet.

Is it a matter of opinion or defamation?

It’s also crucial to distinguish between defamation and an opinion when dealing with defamation allegations. Even if an opinion is false and regarded as an allegation, it still defames the individual in the issue.

Verification and intent

When it comes to defamation cases, intent – and the effort to verify facts before making statements that could be considered defamatory – is crucial.

How to defend against a slander lawsuit

Someone could defend themselves against a defamation case by proving:

  • The statement was true.
  • The statement was given as an opinion, not as a fact.
  • It was made with the claimant’s approval.
  • It was communicated accidentally.
  • It was privileged information (something communicated with or by an attorney that the defendant had a right to possess).
  • It was a fair comment on a matter of public interest (such as offering an opinion at a city council meeting).

Libel vs. slander

Both libel and slander are forms of defamation. In legal terms, libel involves material that is published or displayed, which is then seen by a third party. Slander is a type of oral defamation that’s said out loud to another person.

Torts and defamation law

While the First Amendment prohibits the government from punishing people for their words, the notion of freedom of speech does not protect you or your company against a defamation lawsuit.

The majority of slander and libel cases are handled by state courts, which apply common law defamation rules. It’s a legal area that allows a defamation action to be filed without proof of actual harm or damage to a person’s reputation.

Simply establishing that a speech was defamatory could be enough to prove a case under American law. Winning special damages is a different story.

In the landmark 1964case of  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.

The court said a claimant would have to prove that someone acted with “actual malice” by publishing false statements about public officials.

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
  • Settlement 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.

Defamation in the workplace

While high-profile libel or slander cases frequently make the news, defamation isn’t only a problem that affects celebrities; it may also affect your company.

Defamation in the workplace might occur as a result of anything as innocuous as an employee sending a joke about a client via email or retweeting a rumor. Defamation can cause distress and loss of income for the people and organizations it impacts.

Defamation of character in the workplace can also happen in a variety of situations. For example, a surprise meeting may inspire an employee to send out emails falsely claiming the meeting was conducted to discuss misconduct and slandering the people involved.

As a business owner, you not only have your reputation to protect, but also the financial vitality of your company. Even if a court case finds you to have done nothing wrong, the financial implications of defamation claims can be damaging – especially to small businesses and sole traders.

The cost of covering your legal fees could force you to make cuts or even halt operations entirely. Professional indemnity cover may be used to protect a business from defamation claims by assisting with legal fees and damage pay-outs.

How to prevent a defamation claim

Here are some tips on how to manage communications to lessen your risk of facing accusations of libel or slander:

  • Saying something in an email or on social media that you wouldn’t want to read on the main page of a national newspaper or website is not a good idea.
  • It may seem self-evident, but don’t make up anything about your customers, competitors, or anyone else.
  • Even if you know something is true, don’t express it if you think it may offend someone.
  • If you’re writing content, double-check the facts and, if necessary, include references.
  • Don’t take assertions made by other people or organisations at face value.
  • Repeating claims you’ve heard or read should be avoided. Even retweeting a potentially defamatory Tweet could result in a lawsuit.
  • Establish a clear social media policy and ensure that all employees have received training.

It is also a good idea to choose a standalone professional indemnity product or get covered as part of a comprehensive business insurance package.

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.

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