Libel, Slander, and Defamation: What They Really Mean for Businesses

Some reasons for needing business insurance are more obvious than others. For instance, it’s easy to envision someone slipping in your lobby—which is why you need bodily injury coverage. Business owners should be aware of another reason general liability insurance is crucial for risk management.

In addition to bodily injury, general liability coverage protects against personal injury as it pertains to non-professional negligence. Offenses covered under this type of liability protection include libel, slander, and defamation.

Although libel and slander exist within the same realm, they differ in medium. Slander is an “oral statement of untrue, defamatory remarks that lower a person's esteem in his or her community.” In other words, slander is typically defamation spoken to a third-party. Libel, on the other hand, is written.

Anyone can bring a lawsuit against your business if they feel you or another employee defamed them via libel or slander. In order to have a case, they’ll need to be able to prove:

• Someone involved with your organization published a falsehood about them
• They experienced direct financial or reputational damage as a result

In many cases, companies decide to settle out of court, rather than pursue litigation. Why? Seeing a court case to the end racks up defense costs and bad public relations. Settling can still be very expensive, but it’s one way to accelerate proceedings and move on.

For example, Disney recently faced a lawsuit—as the owner of ABC News—from a South Dakota meat producer. Beef Products Inc. sued ABC for defamation following their 2012 investigative story on its meat additive, which ABC called “pink slime.” The technical term the producer prefers is “lean finely textured beef.” The plaintiff sought $5.7 billion in damages. The case claimed the story led to a national uproar, fueling layoffs and plant closures for Beef Products Inc.

The result? Disney settled for a whopping $177 million—likely to avoid a multi-year trial and possible harsher outcome. This case demonstrates that if plaintiffs can link words to material consequences, companies face huge potential penalties for defamation.

But defamation—both libel and slander—can play out on a much smaller stage too. And, the more interconnected our world becomes, the more online locations there are to misstep. For example, let’s say you create a social media post comparing your services to a local competitors. People in the community start getting involved, and soon it’s gone viral within your community. If you posted any untrue information about your competitor and caused them to lose business, they could sue.

To avoid facing a defamation lawsuit, think carefully about everything you post online, say to the media, or tell people face-to-face. Double check your facts before going public with any information, as false claims are gateways to litigation.

And finally, prepare for the worst-case scenario with general liability insurance. This crucial coverage will pay for your legal defense and damages if you’re found liable for defamation in any form. Use CoverHound to find an affordable business insurance policy today!