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Bloggers -- You Might Have Already Had Libel Insurance,

but you might have lost it by having ads or a tipjar. I posted about this a couple of years ago, but I was reminded of it recently (fortunately not because of anything involving this site), so I thought I'd post again about it. (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 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 blog is entirely noncommercial — you neither have ads nor solicit donations for a tip jar, and you don't systematically use your blog as primarily promotion for your business — then you should be covered for libel lawsuits arising out of your blog posts, because the blogging 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 (as best I can tell, Georgia, Indiana, Minnesota, Mississippi, North Carolina), even a blog that makes some money will be covered if blogging 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 blogging, 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 blogging 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, especially because libel lawsuits against bloggers are thankfully rare, and 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 forgo, 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?

  1. Read your insurance policy. As I said, it may not be a hard read. Pay close attention to all the sections, to see if there might be some unexpected exclusion that may apply. Also pay close to attention to the definitions section, since some terms may be defined in counterintuitive ways.

  2. Immediately notify your insurance company, in writing, that there might be a claim against you; send it 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.

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

  3. 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.

  4. 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.

    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.

  5. 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 blogging, (2) you might lose it, depending on the state you're in, if you sell ads, have a tipjar, or otherwise make even small sums of money from your blog, (3) you may therefore want to plan your blog financing 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 it repeatedly for an answer.

tdsj:
forgo or forego? ;) [EV: Either is fine, see, e.g., the American Heritage, but I appreciate your pointing it out -- I prefer to use "forgo" to mean "abstain from," so I've changed the "forego" to "forgo."]
7.24.2007 6:33pm
BTD_Venkat (mail) (www):
I read somewhere that shield laws in some states (WA) are only applicable to commercial enterprises.
7.24.2007 6:53pm
tdsj:
But see Garner, MAU at 301-02. Once again, competing authorities.
7.24.2007 7:08pm
Forrest Gump (mail):
What about American bloggers living in foreign countries whose blogs are hosted in the US?
7.24.2007 7:12pm
AnonymousInsuranceAgent:
Speak to you lawyer first. If its a frivolous claim, or a small claim that takes a long time to settle it will add to the complexity and cost of your insurance when you try to renew. Its not necessarily a genius idea to run to the insurance company before you know whether there is any real potential loss.
7.24.2007 7:39pm
BobH (mail):
I'm an insurance-coverage lawyer, and Eugene's advice is quite sound. The only things I'd add are:

(1) Don't wait to read your policy until after something potentially bad happens to you. Read your policy when you first receieve it -- many homeowners/renters policies are written in "plain English," and are pretty easy for a layman to understand -- and get in touch with your agent/broker immediately if doesn't appear to cover what you asked for. If the policy is basic (i.e., it consists of no more than a declarations page, a list of forms (sometimes optional), and the policy form itself), this is pretty straightfoward. If you have bought additional coverages, such as "riders" for jewelry or other valuables, the additional terms are usually on separate sheets of paper called "endorsements"; you want to be sure that all of the endorsements you paid for are in the policy materials.

(2) If you get sued, take Eugene's advice one step further: send the summons and complaint to the insurance carrier (or to your agent/broker, with a request that he or she forward it to the carrier's claims department) with a cover letter demanding that the carrier defend you against the lawsuit. This is called a "tender letter," and in most states the duty to defend begins as of the time of tender -- so don't wait around, because if you hire a lawyer before you tender to the carrier, you might well not be able to recover the legal fees you run up before you tendered (called, logically enough, "pre-tender fees"). And send that letter certified mail, return receipt requested. And keep the return receipt.

(3) In every state, as far as I know, the carrier's duty to defend its insured against a lawsuit is very broad. The general rule is that the carrier has to defend if there is a possibility (not a "good possibility" or even a "reasonable possibility") that the carrier would be required to indemnify its insured -- that is, pay the damages -- under some coverage in the policy. So in the situation Eugene hypothesizes, the oods are very good that the carrier will provide a defense. (In many states a carrier can refuse to defend on the basis of an exclusion, but only if it is absolutely certain that the exclusion obviates any possibility of an eventual duty to indemnify. Although the "business pursuits" exclusion can have that effect, I would think -- withing having researched it -- that blogging and tip jars are such recently-begun activities that there is very little (if any) law on whether having a tip jar, in and of itself, turns a blog into a "business pursuit." So if you're in that situation, and you get sued, and your carrier declines to defend on the basis of the "business pursuits" exclusion, I'd say you should not give up -- at least send another letter, what the heck.)

(4) If you get sued and your carrier is defending you, and you receive a settlement offer that's within policy limits, tell your lawyer to demand that the carrier accept the demand and get you out of the lawsuit. In most states the duty to settle is an offshoot of the duty to defend, and the carrier is required to place its insured's interests at least on a par with -- if not above -- its own financial interest. The carrier doesn't have to accede to a demand within policy limits, because its duty extends only to reasonable demands that are within policy limits. But if the demand isn't too high, many carriers will accede -- both because it's safer not to expose the insured to a judgment that exceeds policy limits (because to do so might lead to bad-faith damages assessed against the carrier), and because it's cheaper to settle -- depending, of course, on the demand -- than to take a lawsuit through trial and appeal (and note that in most states the duty to defend includes the duty to fund an appeal).

Sorry to be so long-winded. It's not every day I get to show off this knowledge in public.
7.24.2007 8:02pm
Dave Hardy (mail) (www):
How about responding to a threatening letter with "I am in receipt of your letter of ____, 2007.

I am a trial lawyer. I am already visibly aroused."
7.25.2007 12:23am
jimbino (mail):
The smart thing, of course, is not to carry insurance at all. The expected return on the insurance premium dollar is on the order of 50%, less if the insurance covers losses that don't apply to your situation and even less if you are too honest to stage losses or embellish the damages.

A person without insurance is much less likely to be sued, particularly if he has few assets.

Insurance is everywhere and always a foolish investment or gamble, unless you are specially liable to the set of covered losses or you intend to defraud the insurer.
7.25.2007 1:00am
von Neuman (mail):
Jimbino, are you a risk-neutral agent?
7.25.2007 1:25am
jimbino (mail):
No, I just plugged the numbers into my spreadsheet to figure out that the average Amerikan who insures his family with $1,000 in monthly premiums will be some $7,000,000 poorer than the guy who goes "bare," puts the monthly premium amount on one spin of the roulette wheel, and pays his own losses over a 45-year period.

Insurance is a religion.
7.25.2007 11:35am
Tyrone Slothrop (mail) (www):

If you have a tip jar but the income doesn't cover out-of-pocket expenses relating to the blog, I would think it wouldn't be a "business pursuit" -- does this sound right?

(No tip jar or ads, myself.)
7.25.2007 3:24pm
cathyf:
How does this relate to so-called "hobby income"? The IRS makes a distinction between a real business/profession/etc. and a hobby where you might bring in some incidental income but it doesn't cover your costs. (For example, the artist who occasionally sells a work but it doesn't cover the cost of paint, canvas, clay, or whatever materials went into the art.) Does the insurance company get to deny your claim as business even though the IRS would consider it a hobby?
7.25.2007 4:38pm
Bill Dyer (mail) (www):
It's been several years since I had occasion to check, but about 15 years ago, when I was defending a small publishing company in a defamation action, its standard-form commercial general liability insurance policy also included defamation. I promptly made demand on the carrier that it defend and indemnify. It responded, predictably enough, with a reservation of rights letter, but didn't deny coverage outright.

This was in many ways the best of all possible worlds for my client, because under local state law, the reservation of rights letter created enough of a conflict of interest to justify my client in (re-)hiring me, rather than going with a defense firm chosen by the insurer. I sent my bills to the carrier who (eventually, grumpily) paid them. And the carrier sent a representative to the mediation who ended up making a offer within the policy limits that was substantially larger than I would have recommended myself, or than my client would have been willing to pay, but that did indeed get the case settled.
7.25.2007 5:50pm
Bob Coffield (mail) (www):
In the past a blogging colleague asked about whether or not specific coverage is available. I'm not aware of any company selling such coverage. Ran a couple of searches but came up with nothing. Anyone?
7.25.2007 11:30pm