Insurer Must Cover Junk Fax Settlement

By Robyn Hagan Cain on September 18, 2012 | Last updated on March 21, 2019

We get a fair number of junk faxes at our office. Our fax machine is next to the paper recycling bin, so it’s easy to toss them and forget about them. Because that’s what most people do.

Most people are tossing out a veritable gold mine; under the Junk Fax Act, they could be suing and collecting damages for those unwanted faxes.

Before you shudder at the thousands of dollars you’re losing by simply ignoring your in-house money press fax machine, just think about the money you’re saving insurance companies. Yes, insurers have to indemnify those overly-aggressive-faxers under advertising injury provisions.

And that brings us to today's Eighth Circuit Court of Appeals case.

Autopia, an auto repair company, hired a firm called Business to Business Solutions to fax 5,000 advertisements to prospective customers in 2005. According to Autopia, Business to Business Solutions had represented that its services complied with faxing guidelines and that it only sent faxes to persons who had consented to receive them.

Percic Enterprises was one of the recipients of these fax advertisements, but it alleged that it never consented to receive them.

Percic brought a class action lawsuit against Autopia in Minnesota state court, claiming that Autopia had violated the TCPA and committed the common law tort of conversion by sending unsolicited fax advertisements to it and other class members.

The Junk Fax Act amendment to the Telephone Consumer Protection Act (TCPA) prohibits the sending of unsolicited fax advertisements and provides a private right of action to recipients of such faxes. Injured parties may sue for actual damages or for a statutory amount of $500 per violation.

When Percic slapped Autopia with a lawsuit, Autopia turned to its insurers, Owners Insurance Company and Auto-Owners Insurance Company, for indemnification under its commercial general liability and commercial umbrella policies, respectively. Both policies covered advertising injuries.

The insurers, however, argued that they shouldn't be on the line for Autopia's $1,951,500 settlement sum, because TCPA violations aren't advertising injuries not are they covered under the policies' property damage provisions.

Despite ambiguities regarding policy terms, the Eighth Circuit Court of Appeals construed the policy in favor of coverage, and ruled that the insurers had to pay up.

If you receive junk faxes, you might want to consider monetizing them through a TCPA claim. And if you represent a CGL insurer within the Eighth Circuit's jurisdiction, you'll have to write a specific exclusion to avoid TCPA liability.

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