Does the advertising injury coverage that’s often included in a commercial general liability policy protect policyholders from damages stemming from false advertising? The recent lawsuit filed against Church & Dwight Co., Inc – the manufacturer of OxiClean™ – has many business owners asking that exact question.
On September 3, 2019, a California woman filed a class action lawsuit against Church & Dwight Co., Inc., the manufacturer of OxiClean™ – a laundry additive and stain remover. The lawsuit alleges that many OxiClean products don’t contain the number of laundry loads as advertised on the packaging. The case will take months (or more) to unfold in the court system, but it highlights some serious questions for business owners who believe they have comprehensive advertising injury coverage as a part of their general liability policy.
Allegations of False Advertising
The OxiClean case (Pridgen v. Church & Dwight Co. Inc.) alleges that the product packaging falsely advertises an “expected number of loads” – such as 290 Loads or 156 Loads – which misleads consumers into believing they’re getting more of the product. The lawsuit claims that the expected number of loads was calculated by filling the product scoop to Line 1 despite product instructions that recommend filling the scoop to Line 2 for “typical stains” and to Line 4 for “extra tough stains.”
At this point, we don’t know if OxiClean actually made false claims or if the alleged false claims were made intentionally – all of that will be sorted out in the legal system. However, the case highlights an important question for business owners:
Do you know if your commercial general liability insurance has exclusions for “False Advertising” in its advertising injury coverage?
False Advertising Claims & Advertising Injury Coverage
As a core type of commercial insurance coverage, general liability insurance protects your business in the event that you’re found to be responsible for bodily injury or property damage that occurred in conjunction with or because of your business operations. This type of policy often includes Personal and Advertising Injury Coverage – or coverage for damages that could occur as a result of your company’s written or verbal communications, such as libel, slander, or copyright infringement.
That sounds great, right? Here’s the problem. Many business owners assume this is a broad and comprehensive coverage – when it is often quite limited and includes significant exclusions.
Generally speaking, advertising injury coverage doesn’t protect your company from injuries or damages related to false advertising. In fact, many companies have challenged their insurer’s denial of coverage in court, and many court rulings have upheld that the respective insurers had no duty to defend or indemnify the insured for claims arising from the policyholder’s false advertising.
So – what’s that mean for your organization? The OxyClean case highlights how important it is to understand the details of your specific insurance coverage because it can vary significantly from policy to policy. That understanding allows you to implement strategies for minimizing your risk exposures, such as the risk of being sued for false advertising.
We Can Help! Let’s Discuss Your General Liability and Advertising Injury Coverage.
At Swarts, Manning & Associates, we provide a unique perspective on all of your commercial coverage options, and we help to determine which carrier best fits your business needs. We strive to find you the broadest coverage at the best available rate. Give us a call to get started: (833) 878-2820.
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