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image of marketing tilesAt times, failing to provide the right goods or services might be no fault of the business. Accidents happen. However, some businesses mislead their customers about the nature of their products. This could result in significant risks to customers. Should a false advertising claim arise, the bad news is that your insurance might not cover it.

Why Won’t Insurance Cover False Advertising?

Consumer protection law requires most businesses to be truthful about their products. Should they fail to do so, the business misrepresents itself to a customer. This representation may cause harm to customers. This might include physical or financial harm.

Let’s say that your business manufactures a health-friendly brand of juice. You ads guarantee that science has proven this juice will lower cholesterol. While there may be evidence to this claim, there might not actually be scientific proof. Therefore, the company is misrepresenting itself by promising results that might not occur.

In this case, customers may pay for a product they expect to give them a certain result. When it doesn’t, this might constitute a financial loss to the consumer. The customer might actually have grounds for a lawsuit against the company.

You might think your errors & omissions (E&O) coverage can protect you in cases like these. E&O protection usually chips in in case of business negligence or failure to perform duties. It’s a great form of protection to have. However, the bad news is that E&O protection might not protect you from false advertising claims. You may have to look to other forms of insurance for that protection.

Coverage for False Advertising

The law usually makes no difference between intentional and simple mistakes of false advertising. Someone might make a claim against your business even in the event of unintentional acts. If you can’t use your E&O coverage, you might be able to use other forms of insurance.

General liability protection often covers claims of false advertising. Another form of insurance, called Advertising protection, might also protect the business. Nonetheless, each policy varies. Some may still not cover certain instances of false advertising. They will most likely not cover cases of intentional deception.

Call Mitchell & Mitchell Insurance Agency at 888.512.8878 to talk about the false advertising protection you may need. Make sure you tell your agent all of the ways you plan to advertise. This may include print, online or social media promotion. Your agent can help you understand how to protect yourself from claims of false advertising.

10 Most Common and Costliest Small Business Claims

Posted 11:15 AM

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