Media Liability Insurance for Advertising, Design, and Media Professionals
Let’s clear one thing up right away: Errors & Omissions Insurance for media and advertising professionals is often called “media liability insurance” or even “media malpractice insurance.” Whatever you call it, this coverage offers essential protection if you’re providing design, media, publishing, or advertising services to your clients. Here’s a look at how media liability insurance works and how your business can benefit from carrying a policy.
What Is Media Liability Insurance?
Media liability insurance is a policy that offers coverage for lawsuits brought by your clients over the work you do. Usually, these lawsuits allege that you made a mistake or oversight (which is why the policy is also commonly called Errors & Omissions Insurance). Examples of what media liability lawsuits might look like include these:
- A graphic designer uses images provided by a client to mock up a new website. The site is coded and published and then the client gets hit by a copyright infringement lawsuit – turns out, they didn’t have the rights to those images. Here’s the kicker: the company turns around and sues their graphic designer, saying the designer should have double-checked the copyright. Yikes. Luckily, the designer’s media liability insurance covers the cost of hiring a lawyer, who successfully argues that the designer did nothing wrong. Phew.
- An advertising agency conceptualizes a display ad campaign for a local brewery. Everyone’s excited, but the display budget is cut at the last minute. The reach isn’t what was initially expected and the results fall far short of what the ad agency predicted. Unhappy with the outcome (and the fact that they didn’t bring in as much revenue as they expected), the brewery sues the ad agency to recover its losses. Because the agency has an active media liability policy in place, the legal costs are covered, as is the settlement the two lawyers work out.
What Does Media Liability Insurance Cover?
The best way to understand what media liability insurance covers is to compare it to General Liability Insurance (GL). GL helps cover the costs associated with lawsuits NOT directly related to your work. So if a client slips and falls while visiting your office, he could have his medical bills covered by your GL policy.
Media liability insurance, on the other hand, helps cover the costs associated with lawsuits that ARE directly tied to your work. So any work within the scope of your professional activities that prompts a client to sue could be covered by media liability insurance.
Specifically, the legal costs likely to be covered by a media liability insurance policy include…
- Lawyers’ fees.
- Miscellaneous court fees.
- Settlements (if your lawyer advises settling out of court with the plaintiff).
- Judgments (if you go to trial and the court finds you liable).
In other words: once you pay the deductible after making a claim on your media liability insurance policy, you likely don’t have to worry about how you’re going to finance the E&O lawsuit against you.
How Does Media Liability Insurance Work?
One important thing to find out about your media liability insurance policy is whether it’s written on a claims-made or occurrence basis. Claims-made is the norm for E&O policies, but some media liability insurance policies are written on an occurrence basis. Here’s the difference:
- Claims-made policies can cover claims only if both the incident and the claim happened while the policy was active.
- Occurrence policies can cover claims as long as the claim incident happened while the policy was active.
Claims-made policies are more restrictive. If your media liability policy is claims-made, it’s important to keep it active as long as you’re in business (and in some cases, for a period of time after you stop operating).
This may seem like a no-brainer, but sometimes independent designers or small advertising agencies buy their media liability insurance because a client contract requires them to have it. Once they’re finished that client’s projects, they may think it’s okay to let the coverage lapse. This is risky for two reasons:
- Failing to keep a media liability insurance policy current means you may not have coverage when you need it, even if your policy was active when the incident happened. Remember: a claims-made policy requires you to have active coverage both at the time of the incident and at the time the claim is made.
- Other errors and omissions incidents may happen. Even if a client doesn’t explicitly require you to have coverage, they may sue you if they’re unhappy with your work. And if you don’t have an active policy, you have to cover the lawsuit costs on your own.
How Much Does Media Liability Insurance Cost?
Many small advertising agencies and media companies are able to find media liability insurance for less than a thousand dollars per year. For a detailed breakdown of the cost of media liability insurance, take a look at our media insurance cost page.