Are Law Firm Advertisements Covered?

All insurance policies are not created equal. Some policies contain exclusions that many professional may not expect. Take for example a recent decision that evaluated whether a law firm’s advertising practices were covered under a D&O policy. In Rob Levine & Associates, Ltd. v. Travelers Casualty, a Rhode Island federal court considered whether conduct relating to Internet and television advertisements was considered “professional services.”

The declaratory action stems from a series of law firm advertisements that urge would-be clients to “Call a Heavy Hitter Today!” Two ex-clients brought suit based on this advertising contending that the firm falsely claimed to have specialized expertise and engaged in deceptive trade practices. When the defendant reported the claim to its D&O insurer, the carrier denied coverage under an exclusion that precluded coverage for claims “related to the rendering of, or failure to render, professional services.”

The court concluded that the exclusion did not apply to these claims and that coverage was required. Specifically, the court held that the exclusion may apply to claims arising from the rendering of professional services, but not from claims related to advertising. Since the underlying claims pertained to misleading statements in advertisements, not the rendering of legal services, the court ruled in favor of the law firm.

This suit provides another example of the importance of maintaining appropriate policies to cover the various exposures facing professionals. Although the outcome favored the law firm, it is clear that a different set of facts could have resulted in an exclusion that would have left the law firm defending out-of-pocket. Failure to fully understand coverage limitations can lead to expensive exposure.

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1 Comment

  1. I think one of the main messages here is that its a little unusual for a Directors + Officers liability insurance policy to provide coverage for Advertising Liability. There are much more direct (and exceeedingly less expensive) insurance products to address this exposure. Primarily, the basic Commercial General Liability (CGL) policy will almost always include coverage for “Advertising Liability”. Broader, Errors/omissions or “cyber” insurance policies usually offer an otion for Media Liability coverage, which would also address this exposure (without having to go to court over the coverage issue).

    Dick Clarke
    J. Smith Lanier & Co.
    Atlanta, GA
    ([email protected])

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