Incorporate or rely on personal umbrella policy for best protection against libel?

[Los-Angeles]

What is the name of your state (only U.S. law)? California
I have a website with reviews of businesses that I write. I am not incorporated. I do have excess liability insurance however. This type of insurance does not cover business related lawsuits so I make it point not to have Google ads, Amazon ads or any type of ads. No revenue. A purely informational website.

Do you think I would be better protected by incorporating in a state like Wyoming? I know that often lawyers try to find individuals liable when suing corporations. But at that point wouldn't it be considered a "business venture" and then my personal umbrella policy would not cover me?

 

[quincy]

What is the name of your state (only U.S. law)? California
I have a website with reviews of businesses that I write. I am not incorporated. I do have excess liability insurance however. This type of insurance does not cover business related lawsuits so I make it point not to have Google ads, Amazon ads or any type of ads. No revenue. A purely informational website.

Do you think I would be better protected by incorporating in a state like Wyoming? I know that often lawyers try to find individuals liable when suing corporations. But at that point wouldn't it be considered a "business venture" and then my personal umbrella policy would not cover me?

Your question is not a legal question. It is a business decision that you must make, best made after consultation with a business/financial professional in your area who can discuss the pros and cons of incorporating.

You are wise to have liability insurance.

Good luck.

 

[Zigner]

Frankly, incorporating will have no effect in this situation as the corporate veil (look it up) would be easily pierced.

 

[quincy]

And, because you will be writing your own reviews, the Communications Decency Act section 230 will offer you and your website no protection. That is why liability insurance is essential for a site such as yours.

Purely informational reviews need to be factual or pure opinion (opinion that doesn't state or imply false facts) to avoid a defamation lawsuit loss. Review sites of all sorts tend to attract the attention of those reviewed - and this is not always a good thing.

Los-Angeles, I do not know how skilled a writer you are but review-writing is not easy. You might benefit from reading through the information provided by the Knight Community News Network, an excellent resource for online writers. Although the entire site is worth reviewing, under "Tools" in the banner, look for the learning module titled "Legal Risks."

Here is a link: http://www.j-lab.org/projects/knight-community-news-network/

Again, though, incorporating is a business decision and not a legal one, although there can be legal and tax implications that need to be considered when deciding on a business structure.

 

[adjusterjack]

Do you think I would be better protected by incorporating in a state like Wyoming? I know that often lawyers try to find individuals liable when suing corporations. But at that point wouldn't it be considered a "business venture" and then my personal umbrella policy would not cover me?

It wouldn't matter where you incorporated because incorporating wouldn't shield you from personal liability for your opinions.

And your website is not a "business venture" if it's just a place to write your opinions (a blog?).

It would, however, become a "business" if you incorporate (or LLC) simply because of the nature of the entity. So I suggest you avoid that.

Your personal umbrella liability coverage kicks in above your primary policy limits for anything that's covered by your primary liability policy. For items that may be excluded by your primary liability policy (perhaps defamation) the umbrella coverage kicks in after a lower Self Insured Retention (deductible), often $25,000 but could be less for a higher rate.

Check your homeowners or renters policy as you might actually defamation coverage in the primary policy that covers you from dollar one.

It's called Personal Injury Coverage (as opposed to Bodily Injury) and is often offered (as an option) or included (as a marketing package) in a separate coverage part that provides numerous policy enhancements.

 

[quincy]

... And your website is not a "business venture" if it's just a place to write your opinions (a blog?).

It would, however, become a "business" if you incorporate (or LLC) simply because of the nature of the entity. So I suggest you avoid that ...

I am not sure we have enough information to suggest that Los_Angeles avoid incorporating - I think a personal review is needed - but like you and Zigner, I am not seeing any benefits for Los_Angeles to a formal business structure, based solely on what he has written and his stated legal concerns.

He definitely is smart to have insurance coverage enough to protect his writings from the lawsuit or lawsuits that might arise over his reviews, though. Review sites are a magnet for lawsuits (or threats of lawsuits). The best way to avoid a lawsuit loss is to know how to write proper reviews. A look at Consumer Reports can show the proper way to write a review.