Advertisement – An Assertion to Attract Public Attention
In plain language: An advertisement is a message (images, text, sound, or video) that is designed to get the public’s attention. From fliers in the mail to ads on social media, advertisements aim to persuade people to buy a product, use a service, or support a cause.
Technical definition: In the insurance sector, an advertisement describes any broadcast or publication for the purpose of selling or soliciting something. This term is often seen in the context of Commercial General Liability policies where “personal and advertising injury” is a covered peril, including risks associated with creating and publishing advertisement content across various mediums, including online advertising.
Ever checked out a banner ad? Clicked on a link in an email? Those are all forms of advertisement. In the world of insurance, mistakes or oversights in advertising can lead to claims under a policy’s “personal and advertising injury” coverage.
TL;DR
- An advertisement is a message designed to attract public attention
- Crucial in the day-to-day agency work, as it covers “personal and advertising injury”
- Misunderstanding can lead to inadequate coverage and potential E&O claims
- Best practice for agencies: understand variations of advertisement coverage, ensure clear and accurate client communication
What Is Advertisement in Insurance?
In the insurance context, an advertisement refers to any broadcast or publication intended to sell or solicit something. It encompasses a wide range of mediums including print, television, radio, and increasing predominance, online advertising. This term, while straightforward in general settings, carries specific implications within an insurance policy.
Advertisements are typically associated with Personal and Advertising Injury liability, which is often part of a Commercial General Liability (CGL) policy. This covers legal liability that may arise from an act of libel, slander, infringement of copy rights, invasion of privacy and other offenses that could occur during the advertisement process.
It’s essential to understand that not all advertisements are covered. The specific policy wording and applicable exclusions greatly influence what constitutes covered advertising.
Key Related Terms to Know
- Personal and Advertising Injury – Liabilities resulting from offenses such as libel or invasion of privacy during advertising
- Commercial General Liability (CGL) – A business insurance policy providing coverage for liability claims for bodily injury and property damage, and personal and advertising injury
- Invasion of Privacy – Unwanted intrusion into an individual’s private life without consent, often included in personal and advertising injury
- Libel – A written or broadcasted defamatory statement, which is considered an offense under personal and advertising injury
- Slander – A spoken defamatory statement, which is considered an offense under personal and advertising injury
Common Questions About Advertisement
How Does Advertisement Play into Insurance Coverage?
In the world of insurance, advertisements often belong to discussions about liabilities, particularly personal and advertising liabilities in a CGL policy. Your agency may be liable if your advertisement leads to offenses like slander, libel, or invasion of privacy.
What Type of Ads Does Advertising Injury Cover?
The kind of ads covered depends largely on the specific policy and carrier. For instance, if a business distributes a defamatory pamphlet (an ad) that slanders a competitor, the damage may be covered under the personal and advertising injury part of their CGL policy.
Do All Policies Cover Online Advertising?
No, not all policies cover online advertising. Many older policies do not recognize digital media, hence it’s essential to check with your carrier and update scopes of coverage as necessary.
Will My Insurance Cover if I Infringe Copyright in My Advertisement?
This is one major reason businesses opt for personal and advertising injury coverage. It generally covers claims of copyright infringement within advertisements. However, always review the specifics of your policy to ensure comprehensive coverage.
Advertisement vs. Marketing
Advertising and marketing are two terms often confused, yet they represent two different concepts.
Comparison Area | Advertisement | Marketing
|
Primary use case | Convey a message to sell or solicit something | Involves strategies and actions to promote and sell products or services |
Coverage / concept type | Covered under CGL – Personal and Advertising Injury | Not specifically covered under standard insurance policies |
Typical exclusions | Unauthorized use of someone’s idea or copyright, invasion of privacy, etc. | Not applicable |
Who is most affected by errors | Businesses or individuals who advertise their products/services | Businesses involved in promotional activities |
Common mistakes | Infringement of copyright or invasion of privacy | Not relevant from an insurance perspective |
Real Claim Examples Involving Advertisement
Scenario 1: A home improvement company used pictures of a competitor’s work in their own brochure, claiming it as their own. The competitor sued for copyright infringement. Their CGL policy’s personal and advertising injury coverage responded to the claim.
Scenario 2: An online retail store used a banner ad where a model wore attire branded by a competitor. This led to a lawsuit from the competitor. The retailer’s CGL policy, which specifically included comprehensive coverage for online advertising, helped cover the claim.
Scenario 3: A health supplement company made false claims about a competitor in a print ad. The competitor sued for slander. The supplement company’s Personal and Advertising Injury coverage handled the claim.
Limitations and Common Mistakes
- Not all forms of advertising are covered. Traditional forms like print and TV ads usually are, but online advertising often requires additional coverage.
- Assuming all advertising offenses are covered can lead to claims that are not covered.
- Not clarifying coverage for clients can potentially lead to E&O claims.
How to Explain Advertisement to Clients
Personal Lines client “Think of an advertisement like a commercial on TV or a flyer in your mailbox. It’s a message meant to catch your attention.”
Small Business owner “As a business, you might use ads to attract customers – like putting up a sign or sending a mailer. In insurance, advertisement is part of what’s covered under ‘personal and advertising injury’ in your policy.”
CFO or Risk Manager “In your business liability policy, there’s a section called ‘personal and advertising injury’. This covers the business against legal issues that could arise from your advertisement activities – like if you unintentionally use copyrighted materials in your ads.”