Chapter 8

• Jurisdiction: United States

Chapter 8

Coverage B for “Personal Injury” and “Advertising Injury” Liabilities

§ 8.01 Overview

As previously discussed, third-party insurance, of which CGL insurance is part of the product line, is commonly known as “litigation insurance,”¹ because it provides insurance coverage in the form of payment or reimbursement for defense and indemnity obligations in connection with litigation (or claims not reaching actual initiation of suit) asserted against the policyholder by third parties. As also previously discussed, CGL insurance has two prinicipal coverage parts—Coverage A and Coverage B.² Coverage A provides such “litigation insurance” attributable to third-party claims for “property damage” or “bodily injury.”³ With regard to Coverage A, this book discussed the main coverage part including the insuring agreement and common conditions,⁴ common exclusions,⁵ and the pollution exclusions⁶ in the immediately preceding chapters.

Coverage B, on the other hand, is the focus of this chapter. Coverage B affords the same “litigation insurance” for liability of the policyholder for “personal injury” and “advertising injury” suffered by third parties. This chapter focuses on the Coverage B issues likely to be faced by businesses. In particular, it sets forth the relevant insuring agreements, including the 1973, 1986, and 1998 form agreements.⁷ Then, it discusses the various coverage issues, including: (a) the business or advertising activity;⁸ (b) the offense committed in the coverage territory during the policy period;⁹ and (c) the enumerated “personal injury” offenses¹⁰ and “advertising injury” offenses,¹¹ including application to statutory claims likely faced by real estate-related entities.¹² Finally, it discusses some common exclusions, including those for intentional acts¹³ and breach of contract, among others.¹⁴

§ 8.02 Insuring Agreement

Although the Coverage B insuring agreement has changed over time, the standard-form agreement has always contained a promise by the insurance company to defend and indemnify the policyholder for liabilities associated with certain offenses committed in the course of its advertising or business activities.¹⁵ There are three forms that are generally in use or have been used: (1) the 1998 personal and advertising injury coverage form (“1998 Form”); (2) the 1986 personal and advertising injury coverage form (“1986 Form”); and (3) the 1973 personal and advertising injury coverage form (“1973 Form”).¹⁶ The 1986 and 1998 Forms are now more prevalent, but all three forms are generally still in use and remain the subject of litigation.¹⁷ Generally, insurance companies currently tend to use the more recent forms (1986 or 1998 Form), although that practice is far from absolute.¹⁸

[1]—The 1998 Personal and Advertising Injury Form

The 1998 Form contains the following insuring agreement, with emphasis (italicized language) provided to highlight the relevant coverage issues for this treatise:

“We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury’ to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.”

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“This insurance applies to ‘personal and advertising injury’ caused by an offense arising out of your business but only if the offense was committed in the ‘coverage territory’ during the policy period.”¹⁹

The 1998 Form defined the following terms, again with emphasis (italicized language) provided to highlight the relevant coverage issues for this treatise:

“ ‘Advertisement’ means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For purposes of this definition:

a. Notices that are published include material placed on the internet or on similar electronic means of communication; and

b. Regarding web-sites, only that part of a web-site that is about your goods, products or services for the purpose of attracting customers or supporters is considered an advertisement.

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“ ‘Personal and advertising injury’ means injury, including consequential ‘bodily injury’, arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;

d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services;

e. Oral or written publication, in any manner, of material that violates a person’s right of privacy;

f. The use of another’s advertising idea in your ‘advertisement’; or

g. Infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’ ” ²⁰

[2]—The 1986 Personal and Advertising Injury Form

The 1986 Form contains the following insuring agreement, with emphasis (italicized language) provided to amplify the coverage issues:

“a. We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘ personal injury’ or ‘ advertising injury’ to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages.

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“b. This insurance applies to:

(1) ‘Personal injury’ caused by an offense arising out of your business, excluding advertising, publishing, broadcasting or telecasting done by or for you;

(2) ‘Advertising injury’ caused by an offense committed in the course of advertising your goods, products or services; but only if the offense is committed in the ‘coverage territory’ during the policy period.” ²¹

The 1986 Form defined the following terms:

“ ‘Advertising injury’ means injury arising out of one or more of the following offenses:

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services;

b. Oral or written publication of material that violates a person’s right of privacy;

c. Misappropriation of advertising ideas or style of doing business; or

d. Infringement of copyright, title or slogan.

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“ ‘Personal injury’ means injury, other than ‘bodily injury,’ arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor;

d. oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; or

e. Oral or written publication of material that violates a person’s right of privacy.” ²²

[3]—The 1973 Personal and Advertising Injury Form

An earlier version, the 1973 Form, contains the following agreement with emphasis (italicized language) provided to highlight the coverage issues:

“The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ‘personal injury’ or ‘advertising injury’ to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured’s business, within the policy territory, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury.”²³

The 1973 Form defined the following terms:

“ ‘Advertising injury’ means injury arising out of an offense committed during the policy period occurring in the course of the named insured’s advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan.

“ ‘Personal injury’ means injury arising out of one or more of the following offenses committed during the policy period:

“(1) false arrest, detention, imprisonment or malicious prosecution;

“(2) wrongful entry or eviction or other invasion of the right of private occupancy;

“(3) a publication or utterance

“(a) of libel or slander or other defamatory or disparaging material; or

“(b) in violation of an individual’s right of privacy except publications or utterances in the course of or related to advertising, broadcasting, publishing or telecasting activities conducted by or on behalf of the named insured shall not be deemed personal injury.” ²⁴

[4]—Distinctions between the 1973 and the 1986/1998 Forms

The 1998 Form made some rather minimal modifications to the 1986 Form.²⁵ In particular, the 1998 Form combined “personal injury” and “advertising injury” into one definition in the standard agreement.²⁶ Likewise, in the definition section, it eliminated the redundancy to make one defined term instead of two.²⁷ In addition, the 1998 Form combined the b.1 and b.2 sections of the insuring agreement into one section (section b), continuing to require that the relevant offense arise from one’s business and be committed in the relevant coverage territory.²⁸ Moreover, the 1998 Form created an exclusion for advertising, publishing, telecasting, and broadcasting businesses by pulling such language from section b.1 of the 1986 Form’s insuring agreement.²⁹

Further, the 1998 Form clarified what was meant by advertising activities by defining “advertisement” (to the extent “advertising” was previously undefined).³⁰ Finally, the 1998 Form defined “personal and advertising injury” to include consequential bodily injury, and the 1998 Form replaced the enumerated offense of: (a) “misappropriation of advertising ideas or style of doing business” with “use of another’s advertising idea...