You May Already Have Libel Insurance for Your Posts

But you might lose it if you make even a small amount of money for posting (e.g., get advertising revenue from your blog).

I blogged about this years ago, but I thought I'd repeat it, partly prompted by a couple of recent queries on the subject. (Thanks to Kurt Opsahl of the Electronic Frontier Foundation for first suggesting this point, and to my wife for her advice on insurance law. Please note, though, that I'm not an insurance lawyer, though I've done a bit of research on this subject. Don't take this to the bank, and do let me know if you are an insurance lawyer and have some corrections. Consider this general speculation about the lay of the land, and not individualized legal advice.)

[1.] It turns out that homeowner's insurance policies, and possibly also some renter's insurance policies, generally cover libel and invasion of privacy lawsuits. That may sound odd, but the policies tend to cover both damage to your property (the main reason, I suspect, that most people buy these) and liability for unintentional harm that you inflict on others. One policy that I read, for instance, says that

If a claim is made or a suit is brought against any insured for damages because of bodily injury . . . caused by an occurrence to which this coverage applies, we will:

1. pay up to our limit of liability for the damages for which the insured is legally liable; and
2. provide a defense at our expense by counsel of our choice even if the allegations are groundless, false, or fraudulent….

POLICY DEFINITIONS …

"Bodily injury" means; … personal injury … arising out of … libel, slander or defamation of character; or … invasion of privacy.

If you have an umbrella liability policy, it may provide extra monetary coverage. Of course, you're only covered if your insurance contract does indeed specify this, explicitly or implicitly. You ought to read your policy (they are often quite readable), and pay close attention both to the body of the policy and any separate definitions section.

[2.] These policies generally don't cover punitive damages, but they do cover both compensatory damages and litigation defense costs. Fortunately, that's what you most want to have covered.

Libel cases are hard for plaintiffs to win, and punitive damages are especially hard to get. If you're writing on matters of public concern, and are sued for libel, you can't be liable for punitive damages unless a jury finds that you knew your statement was false or at least knew it was quite likely false but blithely published it without any investigation. So chances are you won't be on the hook for punitive damages, or even for compensatory damages.

But even if you win, you could spend huge amounts of money defending yourself. That's where the insurance can be especially handy.

[3.] However, these policies generally explicitly exclude liability related to "business pursuits." The exclusion and the definition of "business pursuits" may vary from policy to policy, so check yours (and again check both the homeowners' insurance and your umbrella policy, if you have it). Still, I'm told that most policies just say "business pursuits," and sometimes define them as referring to a "trade, occupation, or profession."

If your commenting, blogging, or other posting is entirely noncommercial — you don't sell ads or solicit tip jar donations, monetize your Youtube videos, or systematically use your blog, Facebook page, or Twitter feed as primarily promotion for your business — then you should be covered for libel lawsuits arising out of your posts, because the posting wouldn't be a business pursuit. (Possible exception: If your primary occupation is a professor or a journalist, then even noncommercial posting on topics related to your specialty may conceivably be seen as part of your main occupational "business pursuit"; I know of no precedents one way or the other about this.)

But if you make some money out of it, even a small amount, then in many states you probably won't be covered. In a few states (when I last checked, Georgia, Indiana, Minnesota, Mississippi, and North Carolina), even posting that makes some money may be covered if it isn't your primary occupation. In Arkansas, Idaho, Louisiana, and Michigan, you might be able to get coverage on the theory that making money wasn't your primary motive in posting, and that you were instead doing it as a hobby with money being only a side consideration. Still, the majority view, as I understand it, is that any moneymaking component (so long as it's regular, rather than just one-time or highly intermittent) makes your posting into business activity and thus excludes it from coverage. This isn't entirely clear, but that's my sense from reading some cases and a couple of reference works.

[4.] This means that if you're worried about the risk of libel lawsuits, you might want to consider staying entirely noncommercial. Naturally, you wouldn't have to do it if you live in a state which reads the "business pursuits" exception narrowly. (Most homeowner's insurance policies, I'm told, don't have a separate provision indicating what state law would be used to interpret them, so courts would generally apply the law of where you live.) And if you figure that you'll make lots of money from the ads or the tip jar, you might be willing to run the risk, because you might think that your posts would be unlikely to trigger a lawsuit.

But if you think that having libel insurance will let you sleep better at night, you might conclude that it's better to forego, say, $500 worth of advertising income in a year in order to remain insured.

[5.] What should you do if you get a threatening letter?

[A.] If you do think your policy covers libel, or think that it might, immediately notify your insurance company, in writing, that there might be a claim against you. Send the company a copy of the nastygram you received, and a dated cover letter. Tell the company that you need to consult a lawyer to deal with the threatening letter, and ask it to get you a lawyer right away, or to authorize you to consult one yourself on their dime. The insurance company may not have an obligation to pay your lawyer's bills until the lawsuit is filed, but it doesn't hurt to ask.

I'm told that you can usually do the notification through your insurance broker, who knows how to deal with the company, and whom to talk to there. In any case, talk to your broker and see whether he'll do the notification for you or whether you ought to notify them yourself.

[B.] Always communicate in writing, keep copies of all communications, and date all your communications. You can also call the company or the broker (particularly important if you need to nag them), but confirm any substantive communications in writing.

[C.] If the other side's gripe with you is sound — if you did indeed err — post a correction. It's the right thing to do, and it may avoid a lawsuit.

[D.] If a Complaint is filed against you in court, notify the insurance company about that, too, by sending them a copy of the Complaint with a dated cover letter. Demand that they get back to you quickly about whether they're hiring a lawyer on your behalf.

[E.] If the insurance company doesn't get back to you quickly with an answer, hire a lawyer yourself, and show him a copy of the insurance policy. Then inform the company that you've hired the lawyer, and that you expect the company to pay the bills. Bug the insurance people repeatedly, if necessary, including through your insurance broker. If your policy covers libel, and you aren't within the business pursuits exclusion, you likely have a very strong case for coverage; but they can still be slow, and you need to be the squeaky wheel.

[F.] If you do hire a lawyer, show him the policy, and negotiate with him in light of the policy. See if he would agree to represent you for rates that he's pretty sure the insurance company would pay. See if he would agree not to charge you if the insurance company denies coverage. That, of course, depends on his sense of how likely coverage seems to be. But cyber-libel cases are potentially pretty interesting, even glamorous. Some lawyers may be willing to take a small risk of nonpayment to do a fun case like that.

* * *

In any case, these are just a few thoughts; use these numbers for comparison, your mileage may vary. But keep in mind that (1) you may already have libel insurance for your posting, (2) you might lose it, depending on the state you're in, if you run a blog and sell ads or have a tipjar, or otherwise make even small sums of money from your posting, (3) you may therefore want to plan the financing for your posting accordingly, if you're the worrying sort (or for that matter the libeling sort), and (4) if you are sued or threatened with a lawsuit, look carefully at your insurance policies, notify your insurance company immediately and in writing, and bug them repeatedly for an answer.