Have you 'Heard' of insurance coverage for defamation?

FC&S editor’s note: This article is not an analysis of the strength of either Johnny Depp’s or Amber Heard’s case, nor is it a vignette against either. The matter is used for illustration purposes only.

The term “defamation” is getting a lot of press coverage these days. For example, a Virginia jury recently awarded actor Johnny Depp $15 million in his defamation lawsuit against his ex-wife, Amber Heard. But what exactly is defamation? How do you sue for it? And is it insurable?

Defamation goes beyond simply making a statement that hurts another person’s feelings. It is the act of communicating false statements to others about a person that injures the person’s reputation. If a defamatory statement is written down or recorded, it is libel; if it was spoken out loud, it is called slander.

A plaintiff suing for defamation must prove that the defendant made a false and defamatory statement about the plaintiff, whether or not the plaintiff’s name was actually used; that the statement was “published” to a third party who understood the defamatory statement and its nature; and that the plaintiff’s reputation was damaged as a result of the statement.

The key is the falsity of the allegedly defamatory statement. If an allegedly defamatory statement is true, then by definition it cannot be defamatory and is not actionable. If the defendant didn’t know whether or not the statement was true — if the defendant repeated a rumor, for example — then the plaintiff usually has to prove that the defendant was negligent concerning the truth of the defamatory statement. But is defamation a covered loss?

Don’t look to home policies

In the case of individuals, the standard homeowner, tenant or condominium owners policies do not provide any sort of liability coverage for libelous statements made by an insured.

However, coverage can be added by the personal injury coverage endorsement HO 24 82, which provides coverage for personal injury. Personal injury is a defined term and along with providing coverage for false arrest or detention, malicious prosecution and invasion of privacy, it also covers oral or written publication in any manner that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.

For example, Amber Heard’s statements in her op-ed that she was “a public figure representing domestic abuse,” though the article never mentioned Depp by name, could be considered personal injury against Depp’s reputation because third parties could interpret her statements as saying Johnny Depp had abused her.

At first glance, it looks like that would cover any comment an insured makes on social media. However, there are exclusions. Personal injury caused by, or at the direction of an insured, with knowledge of its falsity is excluded. For example, if an insured posts anywhere on any forum, social media or otherwise, that the mayor was involved in a scam to steal the election, but the insured has actual knowledge that the mayor can’t operate the software involved in stealing an election, there would be no coverage since the insured knows the statement is false. If the comments harm the mayor’s reputation and cause him to lose the next election, and the mayor sues the insured, the company will neither defend nor provide any coverage if the insured made those statements knowing they were false.

Intentionally damaging someone’s reputation or invading their privacy will not be covered. Likewise, any such injury that results from the business of an insured, whether the insured owns the business or is just an employee, is also not covered.

But what about a business? For example, if there are two very competitive landscaping businesses and one accuses the other of overcharging customers and deliberately poisoning plants so as to be able to charge for replacements, is there any coverage?

The standard commercial general liability (CGL) policy contains similar exclusions to libelous publication of any manner as in the homeowners form. In this case, if the accusing insured knows that the statements he is making against his competitor are false, there will be no coverage. Also, the exclusion for expected or intended injury will preclude coverage if the insured’s statements intend to injure the reputation of the competitor business.

There is no corresponding personal injury endorsement for the CGL. The only endorsement is a limited contractual liability coverage for personal and advertising injury endorsement CG 22 74 which provides limited coverage for a scheduled contract or agreement. The liability covered, however, is only for false arrest, detention or imprisonment, and does not cover oral or written statements.

So there is some coverage for personal injury, but it is not carte blanche. An insured cannot get into a heated exchange with another poster and start making libelous or defamatory statements that he knows are false and have any sort of coverage from his homeowners policy, or CGL policy if he is acting as a business owner.

Free speech is one thing, but it does not allow one to malign others, however much an individual might disagree or dislike someone, or think they deserve some sort of cosmic punishment.