Whether you buy a businessowners policy (BOP) or a commercial general liability (CGL) policy to protect your organization against liability, every commercial real estate (CRE) owner needs personal and advertising injury coverage. Personal and advertising injury coverage is not only for larger, publicly traded companies. The hazards protected by this important coverage occur in every CRE organization.
Sometimes referred to as Coverage B, this robust coverage helps to protect landlords and retail store owners against costly, even untrue, allegations. Under the BOP, these can include claims alleging libel or slander, wrongful imprisonment, false arrest, malicious prosecution, invasion of privacy, infringement on another’s advertising idea, or infringement upon another’s copyright, slogan, or trade dress. For a more thorough definition of personal and advertising injury, this IRMI article provides insight.
How Insurers Design Personal and Advertising Injury Liability Coverage
Under your CGL policy, Part B of your policy provides this coverage. With a BOP, you’ll find the definition in the definitions section of your policy in Section II – Liability, Section A coverages. Here’s a word of warning. Not every insurer automatically includes personal and advertising injury coverage. Your insurance carrier may exclude the coverage by endorsement, or your insurer may offer a manuscript form they design that does not include this critical coverage. It’s important you ensure your policy protects you with personal and advertising injury coverage in today’s lawsuit-prone environment.
Why Does My CRE Organization Need This Coverage
Let’s take a familiar claim scenario that highlights the need for personal and advertising injury coverage.
You own or manage a 20-unit apartment complex in Camden, New Jersey. After a few tenant incidents, your onsite manager abruptly quits in frustration. You hired a new onsite manager, Robert Davis, who assured you he could handle any type of problem, from plumbing to evictions. A tenant had a recurrent water leak from her toilet. Despite repeated complaints from the tenant and one visit from the complex’s handyman, the leak continued.
Your tenant alleges that on the night of July 24th, 2019, she got up to use the restroom, slipped and fell in water leaking from the toilet seal. She hit her head on the bathtub. She reported the incident to Davis but did not seek medical treatment at that time. The toilet continued to leak.
In August 2019, your tenant withheld her rent, citing the ongoing leak. In September 2019, Davis, still the onsite manager, entered the apartment with a handyman but without the tenant’s permission or 24-hour notice. Your tenant then alleged the handyman hired by Davis stole certain items, including a gold watch given to her by her departed mother. She continued to withhold rent, and Davis evicted her on January 1st, 2020.
The eviction became heated. Your tenant refused to vacate the premises, and Davis refused to let your tenant leave until the police arrived. Your tenant hired an attorney, filing a bodily injury claim for head and neck injuries from her July fall, and alleged the following.
- Theft of her mother’s gold watch
- Wrongful eviction
- Invasion of privacy
- False arrest
Your Coverage A – Liability coverage applies to the bodily injury part of this loss as well as the alleged theft of her personal property. Your insurer would normally defend you for the fall and her head and neck injury if you promptly reported that part of the loss. However, unless your policy includes personal and advertising injury protection, coverage for the balance of the loss – the wrongful eviction, invasion of privacy, defamation and false arrest allegations – would not be covered.
In today’s world of commercial real estate management, you can see how critical personal and advertising coverage can be.
Retail Stores Need Personal and Advertising Injury Coverage
Retail store owners and managers often face critical decisions when patrons don’t pay for items, or manager suspect they may have stolen something. In any instance where your retail store employees ask a person to await the police, to empty their pockets, or to search their purse or backpack, your organization runs the risk of a personal injury suit.
Additionally, if you prosecute someone for theft and a judge or jury finds that person not guilty, you may also face a claim. These can include allegations of false arrest, detention, or imprisonment, or a malicious prosecution claim. Malicious prosecution can occur when an organization or individual initiates criminal proceedings against someone without reasonable cause to do so.
Coverage Exclusions to Personal and Advertising Injury Liability Coverage
While this robust coverage offers excellent protection, some important exclusions may apply to your coverage. Here are some of those exclusions your insurer may cite in claims involving Coverage B.
- Knowingly violating another’s rights. For example, a security guard who protects your retail store asks the police to arrest a customer for shoplifting. If an investigation or criminal proceeding later exonerates that person, you could face a coverage issue.
- In a similar situation, your security guard gets into a fistfight with an unruly patron. The police charge your employee with assault and battery. While you should have coverage for the vicarious liability you may have due to your supervision or hiring of that employee, it’s unlikely that your insurer would continue to defend your employee if he or she is found guilty of the assault.
Other personal and advertising liability exclusions apply, and this article describes those exclusions.
Coverage B Personal and Advertising Injury Coverage is a Must in Today’s World
In today’s environment, many angry tenants and customers seek legal counsel. People can allege injury in many ways, and personal and advertising injury is a growing concern for today’s retail and CRE owners and managers. Habitability of tenancies increasingly affects CRE owners and insurance underwriters alike. To learn more about what’s keeping CRE owners up at night, read this article.
For more information this important coverage, contact us at this link.