Sued For Defamation? No Problem, If You Have Homeowner’s Insurance

By: Hunt Harris*| Staff Writer 

http://www.aig.com

Bill Cosby is being sued by numerous women who say he sexually assaulted them.  However, because the statute of limitations has passed, he is being sued for defamation, rather than for the alleged assaults.  The women are claiming that they were defamed when Cosby’s attorneys and representatives dismissed their allegations as fabrications.  Although Cosby is facing mountainous legal costs, it currently seems likely that his homeowner’s insurance will foot the bill.  His insurance carrier, A.I.G., has been fighting this and filed a lawsuit against Cosby, claiming they should not be responsible for his legal fees.

Although it may seem odd, Mr. Cosby’s policy is similar to those held by millions of other homeowners that increase their coverage in case they are ever sued.  Roger Clemens, O. J. Simpson, and Bill Clinton all used similar homeowner’s insurance policy coverage to help battle their lawsuits.

Typically, a homeowner’s policy will cover bodily injury, but many homeowners with more assets to protect, will purchase umbrella policies.  These policies contain personal injury clauses that protect the homeowner from other circumstances, such as defamation, libel, or slander suits. A.I.G. argues that coverage does not include denials of sexual abuse allegations.  In fact, A.I.G. cites a sexual misconduct exclusion in their policy that they believe releases them of any responsibility to help pay Mr. Cosby’s legal fees.

Unfortunately for A.I.G., Federal District Court Judge Beverly Reid O’Connell in Los Angeles found that A.I.G. had a duty to defend Mr. Cosby. Judge O’Connell ruled that both A.I.G.’s broad interpretation and Cosby’s narrow interpretation of the exclusion were reasonable.  However, since ambiguous terms are interpreted in favor of finding coverage, Cosby prevailed on this issue.

As hard as it is to believe, such policies are quite common.  One way to avoid costly situations like this, is for insurance companies to draft their policies so that they are unambiguous.  The goal obviously being to avoid paying hefty attorneys’ fees and bad publicity, which, may be even more damaging in the long run.

However, as with most issues in the legal realm, this issue is not quite that simple.  Mixed actions, those involving defamation stemming from accounts of sexual assault and from other subject matters, like in this case, are usually covered by these homeowner’s policies.

In the future, insurance companies will have to weigh their options moving forward and decide if the premium price their clients pay for umbrella policies is worth the risk of defending these types of cases.  One thing is clear, insurance companies and everyday citizens alike are at odds with this seemingly sneaky loophole.

Joseph Cammarata, the attorney for the seven women suing Cosby in Massachusetts, feels the same way, stating “you can harm someone and get somebody else to pay for your wrongdoing . . .God bless America!

*Hunt Harris is a second year law student at Wake Forest University School of Law. Before law school, he studied Political Science and Spanish at North Carolina State University in Raleigh, North Carolina.