Question

Fran's Furniture shop, an insurance client of your agency, often runs ads attacking her competitor, Frank's Furniture. Frank's Furniture claims that Fran's Furniture's catalog falsely claims that Frank's products are cheaply made with sawdust and are worthless, which causes a loss of business for Frank's Furniture. If Frank's Furniture sues Fran's Furniture, which coverage will protect Fran's Furniture? Option 1: General Liability Insurance

Option 2: Product Liability Insurance
Option 3: Advertising Injury Liability Insurance
Option 4: Business Interruption Insurance

Answer 1

Frank's Furniture can seek protection through Advertising Injury Liability Insurance if sued for making false claims in ads about Frank's Furniture's products since it covers slander, libel, and defamation in advertising. The correct option is 3.

Step-by-step explanation:

If Frank's Furniture sues Fran's Furniture for the false claims made in their ads, the coverage that would protect Fran's Furniture is Option 3: Advertising Injury Liability Insurance. This specific insurance is designed to protect businesses from claims of slander, libel, defamation, and misrepresentation in advertising.

Since Fran's Furniture is accused of making false statements that devalue Frank's Furniture's products, thereby causing them loss of business, Advertising Injury Liability Insurance would be the applicable coverage to protect Fran's Furniture from financial loss due to legal actions.