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Did you make a comment about another business’s product or service? Perhaps your sales associated did. Now you are facing a claim of reputation damage. What is it? Why does it matter to you?image of man talking through megaphone

Most business insurance helps protect you from claims made against the company. Your general liability insurance may offer some coverage for reputation damage claims. Here is what you need to know about this risk.

How Does General Liability Insurance Help You?

General liability insurance is a form of business insurance designed to protect your company from claims made against you. It is supposed to help you compensate others in case you cause them harm. The goal here is to help minimize financial loss to your company from mistakes made. Most often, these are claims such as slips and falls or property damage.

Yet, anything can happen. When it does, it can become costly to you. Sometimes companies may claim you hurt them through your actions or words. This may include reputational harm.

What Is Reputation Harm?

Reputation harm is a claim that business suffered loss as a result of what you said about them. It might include things like libel, slander or advertising injury.

For example, perhaps a business representative told a customer that the competitor’s product was inferior. Perhaps they made claims that were not true and no one could verify. A claim like this may seem like just business. Yet, it can cause reputation harm.

The competitor may claim the opinion provided by the sales rep hurt their ability to do business. This type of claim is not uncommon. It is also one of the most expensive types of claims that can occur. The cost of reputation damage can sometimes be significant.

Will Insurance Cover It?

If a company claims reputation damage, they usually must demonstrate that what you said or did caused them financial harm. It can be hard to make that link initially. However, it is possible for them to do so in the right legal framework. Various laws govern such processes.

In some cases, general liability insurance can help you. However, you might need to augment your policy with something called personal injury insurance. This is different from physical damage coverage.

If you have the right policy structure, your liability insurance can help to cover the losses the competitor claims occurred. In addition, this component of your business insurance can also help with legal defense should they try to sue you in a court of law.

This is also a good time to speak to your agent about the types and amounts of general liability insurance you have. Find out when you should change or increase coverage to avoid claims like these.

Also Read: Exclusions of General Liability Insurance

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