SLANDER COVERED UNDER “DAMAGE” DEFINITION

A Malpractice policy issued to an osteopathic physician carried an endorsement amending the policy definition of damages to mean “all damages which are payable because of injury to which this insurance applies.” The insured was sued by a professional associate, who alleged that he had been slandered by the doctor during the course of a hospital board meeting.

The “umbrella” carrier stated that its coverage was applicable, but only on an excess basis. The primary carrier denied coverage against slander, but granted that, if coverage were found due, it would be applicable on a primary basis. Determination of the scope of coverage provided by the primary policy was crucial.

Basically, the policy covered “injury arising out of the rendering of professional services by the individual insured as a member of a professional board or committee of a hospital or professional society.” An Amended Definition provision was included as follows: “When used in reference to this insurance, “damages” means all damages, including damages for death, which are payable because of injury to which this insurance applies.” The excess insurer appealed when the trial court ruled in favor of the primary insurer, having concluded that the primary policy did not cover slander.

The appeal court disagreed. It concluded that nothing in the endorsement amending this “damages” definition limited protection of the policy to bodily injury. The slander claim was held to be within the coverage of the primary policy.

St. Paul Fire and Marine Insurance Co., Appellant v. United States Fire Insurance Co., Appellee. United States Court of Appeals for the Third Circuit No. 80-2522. July 30, 1981. CCH 1981 Fire and Casualty Cases 1442.