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I have a business that publishes information and reviews about local businesses. We are registered as an LLC with two partners and no employees.

One of our concerns is frivolous lawsuits from business owners. I don't have any concerns about the information published on our website and it is well protected under Section 230 Protections, but we have seen the occasional idle threat of a lawsuit when a business owner doesn't agree with a review.

What kind of insurance will protect us if we have to fight a frivolous lawsuit? Also, I'd be interested in any specific recommendations for insurance companies that you might have.

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avoid having deep pockets. No deep pockets? you are not worth suing. But why don't you think like a business person? Offer each reviewed business a right of reply or one free review that they can write (and tag it as written by owner). That will calm them down faster and avoid them going legal. – james Apr 18 '11 at 0:10
Nice answer @james ... put it as an actual answer so I can give it a vote. – Robin Vessey May 18 '11 at 7:17

4 Answers

up vote 1 down vote

I'm a lawyer. Directors' and officers' insurance may be able to protect you personally. Never heard of frivolous lawsuit insurance. As you say that you're OK with the information published on your site, but just be sure that the reviews are all factually correct and do not constitute libel or slander and then no reputable lawyer will want to sue you, since there'd be no case.

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Thanks for the feedback. I thought there might be a form of liability insurance that would cover these kinds of legal fees, but it sounds like that's not the case. Do you know of any other ways that companies can help protect themselves from unexpected legal fees? – Nick C. Apr 17 '11 at 21:24
up vote 1 down vote

My startup has

  • General liability insurance
  • Professional liability insurance (aka Errors & Omissions insurance)

I think the prof liab insurance is what you want. It is not meant to cover frivolous lawsuits, but it covers many types of both frivolous and non-frivolous lawsuits. Here is a useful description. I would find an insurance broker to help you. Will probably run you about $2-4000/year depending on the policy limits

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up vote 0 down vote

In addition to general liability and Errors and omission, you can purchase "Contract Litigation Insurance". Although this will not completely protect you from a lawsuit, it will protect you from the risk of having to pay your opponent's attorneys' fees in contract disputes.

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up vote 0 down vote

You want general liability insurance.

Section 230 is actually really helpful to you, because it allows you to get rid of the lawsuit while it is still in the very early stages, before costs really start to rack up. Be sure to get advice from a lawyer who's familiar with Section 230, because there are a few potential gotchas there.

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