Media Mayhem and ADversity
Risk Management for Advertising, Design, and Media Professionals

4 Media Liability Issues No Ad Agency Should Ignore

With abundant social media and instantaneous online publishing, ad agencies face more media liability than ever before. As we covered on the Insureon blog, a single tweet could lead to an $80,000 defamation lawsuit . And these lawsuits can be disproportionately expensive for small-business owners.

You'll need to be prepared for these liabilities. We've identified four media liabilities you need to watch out for:

  1. Copyright / IP issues. Use a cute picture of a cat wearing pajamas in a funny tweet? That's great, but did your employee check to see if the image was copyrighted? Employees may not realize they're committing copyright infringement when they pull an image from a Google image search. Using designs, images, video, or other creative work made by someone else can get you mired in an IP infringement lawsuit.
  2. Freelancer liability. Let's say you hire a designer who misses a key deadline. The client is furious at you. Well, it may not be your fault, but it kind of is. As the business owner, you're responsible for your freelancers and contractors. You can be sued for their mistakes, oversights, and missed deadlines.
  3. False advertising. When an ad agency misrepresents a product, makes specific claims that aren't backed up by research, or echoes a client's sales pitch without fact-checking, you could commit false advertising, have to pay an FTC fine, and face a lawsuit.
  4. Defamation issues (slander, libel, and reputation injury). If someone thinks your advertising, marketing, or social media posts have injured their reputation unfairly, they could sue you in a defamation case. For instance, a client's competitor might bristle if you've criticized their product unfairly or a client's customer may feel insulted by an exchange on social media.

Media Liability Insurance: When It Can Protect You and When It Can't

Now that we've identified four lawsuit risks that advertising agencies have, let's look at what you can do to cover these risks:

  1. Copyright / IP issues. Accidental infringement of copyright or trademark may be covered by Errors and Omissions Insurance. But here's the thing. If an employee knowingly infringes on a copyright, the lawsuit probably won't be covered. E&O and other insurance policies generally don't cover willful misuse.
  2. Freelancer liability. You can add freelancers to your insurance coverage by calling your insurance agent and listing them as an "additional insured." By doing so, your insurance will cover them for work they do for you. Alternatively, you could also require your freelancers to have their own media liability insurance.
  3. False advertising. False advertising probably won't be covered by your insurance, because as stated, insurance usually doesn't cover intentional acts of wrong-doing. You'll want to be careful you fact-check all the information your clients give you. See our eBook "How to Protect Your Business from Your Clients' Bad Judgment" for more on avoiding client-caused mistakes.
  4. Defamation issues. In our article "What Advertising Agencies Should Know about Online Defamation Laws," we explain how media liability insurance works with defamation, slander, and libel. These lawsuits may also be covered under E&O Insurance (aka Media Malpractice Insurance).

To cover media liability, ad agencies should consider investing in agency insurance and adopting best practices that will prevent lawsuits. Prevention is especially important because some liabilities — false advertising and willful copyright infringement — might not be covered.

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