Our insured is a physician who has coverage under a businessowners policy. A lawsuit has been filed against the insured because he hired a collection agency to collect a bill owed by a patient. The patient is suing based on violation of privacy. The professional liability carrier has declined coverage and we are wondering if the BOP would apply. What is your opinion?

Colorado Subscriber

The BOP does provide coverage for a liability claim based on personal and advertising injury as defined on the policy. Part of the definition of personal and advertising injury is oral or written publication of material that violates a person's right of privacy. So, the key point here is whether the insured's actions are publications that do violate another's right to privacy.

The coverage for violating a right to privacy requires a publication of material that violates that right. The BOP itself does not define the word "publication". The dictionary defines the word as making public or making known to people in general, putting information into circulation among the public. That is not done by just hiring a collection agency to collect a payment that is legally due. That is usually a private contractual arrangement between the agency and its client. If that is the way your insured handled the matter, that would mean that a publication did not happen, and thus the definition of personal and advertising injury under the terms of the BOP was not met. The BOP liability coverage insuring agreement would not apply in this claim.

There is also an exclusion on the BOP to consider. Even if the definition of personal and advertising injury was met by the insured's actions, there is an exclusion that applies to injury caused by or at the direction of the insured with the knowledge that the act would violate the rights of another. So, for example, if the insured hired the collection agency and knew that one of the tactics of that agency was to take out public ads about the debtor, or sit outside the debtor's house with a sign alerting the neighbors about the debtor owing money, or contacting the debtor's relatives or employer, that exclusion could be applied to prevent coverage. Such actions by the collection agency could certainly be seen as a publication violating the privacy rights of the debtor, and the insured's knowledge of the actions and assent to such actions would bring the exclusion to bear.

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