The world of media is fast-paced, dynamic and changing constantly. Digitalisation means that media is more accessible than ever before: the internet has created a worldwide platform where creators can share content instantly. This exposure is a double-edged sword for companies in the media industry: reaching more customers means greater profits, but it also leaves them open to more risks. In today’s litigious society, claims of wrongdoing, professional negligence or copyright are on the rise.
Social media has magnified these risks, allowing content to transcend international borders and geographical limits in seconds. Social networking sites mean a quick video upload can turn into an online frenzy in a matter of minutes, and the more contentious the content, the more likely it’ll go viral. A simple mistake can have an enormous impact, which can mean a bankrupting claim for the company responsible. Media liability insurance is a way for companies to protect themselves financially from legal action made against them relating to content they’ve produced.
This guide to media liability insurance covers the following sections:
- What is media liability insurance?
- What is covered under a media liability insurance policy?
- Do I need media liability insurance?
- How much cover do I need?
- How much does media liability insurance cost?
- How to find a media liability insurance provider
- Final thoughts & FAQs.
What is media liability insurance?
Media liability insurance is a type of errors and omissions insurance (more commonly known as professional indemnity insurance in the UK), which aims to specifically protect media companies. Generally, errors and omissions insurance can cover companies from claims of professional negligence, such as mistakes, errors or omissions, or claims that work that isn’t up to scratch. This type of insurance is useful for any company giving advice or providing a service, where a mistake could lead to a financial loss for the client, who might then sue.
Any company creating, distributing or marketing content is exposed to a wide variety of claims of international torts, such as libel and plagiarism, on top of the usual risks relating to faults, omissions and sub-quality work. Thanks to the worldwide web, content can reach every corner of the globe, leaving businesses vulnerable to legal action from anywhere in the world. Media liability insurance is a type of E&O policy tailored to companies in the media sector which can respond to these unique risks. It’s designed to pay out in the event of a claim to cover the associated costs.
In the UK, media liability insurance commonly comes in the form of professional indemnity insurance, either as a policy tailored to those in the media industry or as a media package featuring professional indemnity with other forms of cover. Media liability insurance as a standalone term tends to be more common in the USA.
What is covered under a media liability insurance policy?
There are a whole host of reasons why a third party might make a claim against a business in relation to content they have made, released or shared. Something as simple as a minor typo could leave companies vulnerable to claims of professional negligence. Media liability insurance typically covers the following sorts of claim:
- libel: written defamation of a person or organisation
- slander: verbal defamation of a person or organisation
- breach of professional duty
- intellectual property (IP) infringement or theft: the unauthorised use of another’s material or ideas
- copyright infringement: failure to credit an image or music, or using copyrighted material without permission
- emotional distress: where a third party claims that content is unsuitable for certain audiences, or has caused personal emotional affliction
- plagiarism and piracy: passing off other’s work as your own
- professional negligence: this might refer to what a company has included, or omitted, which leads to a false portrayal of a situation, person or organisation, or a mistake made by your company or one of your staff
- breach of confidentiality: this might include data breaches, such as a leak following a cyber attack, an employee accidentally sending an email with sensitive information to the wrong recipient, or lost data
- invasion of privacy: this type of claim typically refers to films or videos which depict a third party without their permission
- breach of the scope of a licence
- failure to give credit of authorship.
A media liability policy can protect companies financially against the kinds of claims listed above, typically paying out for the legal defence costs of the insured as well as the settlement amount if the case is successful. Should the company in question be found liable for the claim, they may also have to foot the bill for the legal fees of the claimant, which many policies can also cover as part of the payout. In addition, many media liability policies can cover:
- investigations of the insured by regulators and other authorities
- legal costs
- settlement fees and compensation payouts
- costs incurred by replacing or restoring documents
- PR and crisis management costs following a claim.
Sometimes, cyber breaches may not fall within the scope of a media liability policy. When this is the case, insurers typically offer cyber insurance as an optional add-on which they can integrate into a media liability policy for an extra cost, or as a separate policy which can be taken out alongside media liability. Other common optional add-ons to a media liability policy include:
- business interruption: this cover can pay for any lost revenue caused by the claim
- legal defence costs for criminal proceedings
- mitigation costs: some policies can pay for mitigation measures designed to rectify any mistakes or torts before they lead to a lawsuit.
Are there any key exclusions?
What’s covered and excluded by a media liability policy varies from provider to provider. That said, many errors and omissions or professional indemnity insurance policies exclude claims relating to bodily injury, which tends to be the case for media liability insurance, too. Other typical exclusions are:
- dishonesty: many insurers will not cover claims resulting from fraudulent or dishonest acts or omissions committed by the insured
- controlling interest: typically any allegations made against the insured by an entity in which the insured party has a controlling interest, or by an entity which has a controlling interest in the insured company
- claims relating to employment
- breach of contract
- geographical limits: many insurers refuse to insure claims that come under North American jurisdiction, or they may charge extra for coverage in the USA and Canada
- goods and services: any claims arising from faulty products or services would typically require products liability insurance.
As with any type of insurance, there are often seemingly grey areas when it comes to the cover provided. The last clause, for example, may concern businesses who provide services such as advertising services. If you find there is any perceived ambiguity in your policy, it’s imperative to go through the terms, conditions and exclusions with the insurance provider, or with a broker, before you purchase a plan.
Do I need media liability insurance?
All kinds of companies create or distribute content. From radio and TV adverts to social media banners and even promotional emails, almost every business has involvement with some form of media. Creating content carries a higher risk than distributing it, but anybody with an association to the content in question could find themselves in a claim dispute.
If you’re unsure whether you need media liability insurance, consider whether your business is involved in the creation, production or marketing of any of the following:
Any companies involved in the creation, production or marketing of any media content could find themselves liable for claims of international torts, which typically have coverage under a media liability policy. Having insurance in place can protect your profits and the financial stability of your company, as even a minor error can lead to six-figure lawsuits. A media liability policy should be a consideration for any company that creates or markets the following:
- television programmes
This list is by no means exhaustive. As such, this type of insurance tends to be relevant to the majority of businesses across the media sector. Typical media liability policyholders include:
- advertising agents
- marketing and digital marketing consultants
- graphic designers
- brand development agencies
- radio stations
- recording studios
- social media consultants
- market researchers
- editorial consultancies
- telemarketing companies
- public relations agencies.
It’s important to note that it’s not only large corporations who may need media liability insurance. Even if you are an independent graphic designer, proofreader or advertising agent, you could find yourself faced with a claim of copyright infringement, professional negligence or libel. Freelancers and sole traders are also less likely to have the financial strength to recover from the costs of a claim, should one arise.
If you’re unsure of how you could be affected by a claim, consider whether the following scenarios could apply to you.
A radio broadcaster misidentifies an unconnected person as a suspect in a criminal case during a report on air, a story which the station also proceeds to cover on its Twitter page with the same mistake. The named individual could sue the company for libel and slander, and even emotional distress due to the error. Even if the company retracted the comments and issued an apology statement, they may face a substantial compensation payout and expensive legal costs.
Intellectual property theft
A toaster manufacturer enlists the help of a marketing company to market their product. The marketing company develops an advertising campaign with a jingle, which they use in their television adverts. After the advert plays on television, a home-goods manufacturer contacts the company and claims the jingle was the same as one they had used to advertise their vacuum cleaner some years previously. The court finds the marketing company liable for plagiarism and breach of copyright.
The settlement fee includes a compensation payout, copyright infringement fines and substantial legal fees. The toaster manufacturer has to withdraw the marketing strategy, forcing the marketing company to refund their client for the work done. The company would face a bill in the hundreds of thousands without media liability insurance in place.
Misinterpretation of a brief
A media company produces an advert for a client. They misunderstand the brief and centre the advert around content targeting the wrong demographic. The marketing campaign fails to generate the anticipated sales predicted by the advertising agency. The client files a claim against the company due to the error on their part, seeking compensation for their lost sales resulting from the advert flop. With a media liability policy in place, the advertising company could save themselves hundreds of thousands.
How much cover do I need?
It can be challenging to figure out an appropriate limit of indemnity. Insured amounts differ from business to business, and even companies in the same subsector will have different coverage requirements. First of all, companies must consult their client contracts, as many clients may require you to have a minimum level of cover in place before they work with you. Similarly, you must check whether any regulatory authorities or trade associations that govern your activities stipulate a minimum amount of cover.
Beyond any regulatory or contractual obligations, the amount of cover you need depends on the type of content you create, and the type of clients you deal with. You may need a higher indemnity limit if you create content for clients in the USA or Canada, for example, where legal action is both notoriously frequent and expensive.
It’s a good idea to imagine the worst-case scenario and consider the financial ramifications for your client. Add to these the substantial legal fees for yourself and the claimant to estimate an amount of coverage you require. Typically, insurers offer indemnity limits between £50,000 and £10 million, although larger corporations may be able to arrange cover beyond this maximum.
How much does media liability insurance cost?
Insurers will offer you a quote based on a multitude of elements that determine your level of risk. Factors they are likely to consider include:
- the size of the company, based either on the number of employees or the gross annual income
- your company’s business activities, and the kind of work you carry out
- the type of content dealt with
- the level of cover you choose
- the amount of excess you choose
- your experience and claims history. Companies who have been operating for several years without any claims may be seen favourably by insurance companies.
Larger companies that deal with more clients, and companies who opt for a higher level of cover, tend to pay more for their premiums. Opting for a larger excess can bring the premium price down, though it’s worth weighing up the monthly savings against the cost of the increased excess, should somebody make a claim.
Some media activities are considered higher-risk than others, which typically engenders higher premiums. Higher-risk companies might include:
- companies involved in contentious content
- companies which advertise licensed products or products that carry serious health risks, such as tobacco or pharmaceuticals
- companies with high levels of exposure in North America. Many companies exclude the USA and Canada or offer coverage in these territories as a paid add-on, owing to the claims culture in these countries, and thus the elevated costs associated with defending negligence claims.
How to find a media liability insurance provider
The key things to establish before seeking a policy are the features of cover you need, the indemnity limit you require and your budget. This information can help you narrow down your initial search and find providers that can cater to the insurance requirements of your business.
Media liability insurance is a specialised product tailored to companies in the media industry. Some insurers may only offer general professional indemnity insurance or E&O cover, particularly in the UK, in which case you must check that they can protect you against the unique risks which threaten companies in the media sector. Once you’re ready, there are three principal routes to finding a provider.
Approaching insurers directly
The simplest way to find an insurer is to carry out some market research on the internet. Many insurance providers have detailed websites displaying the insurance products they have on offer, complete with policy benefits and exclusions, and even the policy documents in some cases.
Often, you can generate a quote for a particular product on their website by entering your company details. Alternatively, by contacting insurers directly via email or over the phone, you can speak with one of their trained advisers who can help you determine a suitable level of cover and a product which caters to your requirements.
Going through a broker
Brokers provide the added benefit of years of industry experience and insight. This expertise puts them in the best position to understand your company’s needs, as they are familiar with the types of liability claims typically faced by media companies. Using their extensive knowledge of your business and sector’s threat landscape, they can help you calculate an appropriate indemnity limit and recommend particular add-ons that may better protect your company.
Many insurers offer products exclusively to brokers, meaning they typically have access to a broader share of the market than the public. This can translate into lower prices for more extensive coverage.
Using comparison websites
It can be both time-consuming and overwhelming to search the insurance market, with hundreds of suppliers and thousands of products available. Comparison websites can be an efficient way to get an overview of the products on offer. By compiling various products and providers into a list, you can quickly scroll through the features, prices and benefits of each policy, allowing you to easily compare solutions. Many websites allow you to set specific search criteria to narrow down your search.
Final thoughts & FAQs
As technology develops, content is more readily accessible than ever before. We unconsciously consume enormous amounts of content every day: on the car radio, on the TV, adverts on our search browsers, emails in our inboxes. Not to mention thousands of clips, videos and ads that we scroll through on the likes of Instagram, Facebook and TikTok.
With this high level of exposure comes high reward for businesses, who can leverage this easy consumption for their financial gain, advertising products all around the world. But greater rewards come with elevated risks. This kind of exposure leaves media companies vulnerable to countless claims of professional negligence, ranging from small typos to serious copyright issues. Media liability insurance can remove the financial pressure that comes with sharing content on the world stage.
Still have questions relating to media liability insurance? Find answers to common queries, below.
Is media liability insurance tax-deductible?
Typically, errors and omissions insurance is tax-deductible, as it is usually considered an allowable expense in the eyes of HMRC. As media liability insurance is a form of E&O cover, you may be able to deduct your premiums from your income as a business expense when completing your tax return. However, you must seek tax advice from HMRC.
Can authors get media liability insurance?
Authors, too, should consider media liability insurance. Many media liability solutions can cater to the needs of authors and freelance writers, and many insurers have media liability products specifically designed for writers. Producing copy or publishing works can leave the author liable to claims of defamation, trade libel, misuse of information, infliction of emotional distress and a host of other risks, as with any other form of media. It’s therefore important to consider insurance to cover the costs of an expensive lawsuit and potential compensation payouts.
Are media liability policies written on a claims-made or claims occurring basis?
Errors and omissions cover is one of the few types of liability insurance which tends to be written on a claims-made basis rather than claims occurring, and this goes for media liability insurance, too. A claims-made policy typically covers you for claims made against you during the period of the policy, even if the event in question occurred before you took out the plan.
Conversely, policies on a claims occurring basis typically cover claims relating to incidents that occurred during the period of the policy, irrespective of when the claim is made. You might have changed insurer since the event in question, but the insurer you had at the time of the event is the one who typically accepts the claim. Claims-made policies are more common for media liability insurance, but it is possible to find both types. Ensure that you understand the type of policy you have in place, so you know who to contact in the event of a claim made against you.