Lawsuits alleging false advertising against dietary supplement companies seem to be on the rise. Two typical types of lawsuits in this area are the popular “public interest” class action lawsuit (using, for example, California’s Proposition 65 as a foundation) or lawsuits where federal or state governments attempt to enforce existing regulations.
The majority of people in the supplement industry understand the most important coverage included in their commercial general liability policy is allegations of bodily injury coverage. Indeed, the industry has historically been littered with claims of alleged illness or death from its products (yes, death is included in the definition of bodily injury).
Another coverage part in a commercial general liability policy is Personal and Advertising Injury, otherwise known as advertising insurance. Many people believe advertising insurance would, by definition, naturally cover false advertising claims. Unfortunately, this is not the case.
What is covered?
In two words: not much. For the most part, advertising insurance only covers torts that were intentional acts, making the coverage different than claims for bodily injury, which must be unintentional for insurance coverage to be triggered. Advertising insurance is generally designed to respond to claims where legally protected rights of others, if violated or infringed, may result in loss to them. However, advertising insurance coverage has 15 exclusions that narrow and clarify what is covered.
What is specifically covered by advertising insurance is briefly listed below::
- False arrest, detention or imprisonment;
- Malicious prosecution;
- The wrongful eviction from: wrongful entry into or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
- Oral or written publication, in any manner, of material that slanders or libels a person or organization, or disparages a person's or organization's goods, products or services;
- Oral or written publication, in any manner, of material that violates a person's right of privacy;
- The use of another's advertising idea in your "advertisement"; or
- Infringing upon another's copyright, trade dress or slogan in your advertisement.
Several of the above terms have specific definitions not enumerated here. But you get the idea—there is nothing even close to stating that false advertising is covered.