Does Your Business Need Media Liability Insurance?
Does your company create, produce, or market content such as articles, videos, photographs, books, television programs, or blogs? If the answer is yes, your business needs media liability insurance. This coverage will protect your firm against claims based on intentional torts like libel, plagiarism, and invasion of privacy.
Intentional Torts Against Media Companies Not Covered By CGL
Like many businesses, your company is probably insured under a commercial general liability (CGL) policy. A CGL covers claims arising from certain intentional torts under personal and advertising injury liability coverage (called Coverage B). This coverage applies to claims against your business that result from any offense included in the definition of personal and advertising injury. Why would a business need media liability insurance if intentional torts are covered by a CGL?
Coverage B specifically excludes libel, slander, and several other offenses if they are committed by businesses involved in advertising, publishing, broadcasting, or similar activities. Businesses that engage in media-related activities will have no coverage for such offenses unless they purchase media liability insurance.
Examples of Covered Claims
Here are examples of claims media liability insurance is designed to cover:
- A movie production company is sued for copyright infringement by a music publisher who claims that the production company used a song in a movie without obtaining a license from the publisher.
- An online newspaper publishes a negative review of a local cafe. The writer contends that the restaurant failed to pass a recent health inspection due to a rat infestation. The cafe owner sues the newspaper and the writer for libel, arguing that the allegations are false and have caused the cafe to lose customers.
- A gossip columnist befriends a female politician for the purpose of obtaining "dirt" for an upcoming blog. The politician is unaware of the columnist's vocation and shares private information. The columnist reveals the information in a blog on her website, and the politician sues her for invasion of privacy.
- Fantastic Films is a small independent film producer that uses a logo consisting of two letter Fs that intertwine. A competitor begins using a logo that also contains intertwining Fs. Fantastic sues the competitor for trademark infringement.
Media Liability Coverage
Media liability coverage is a type of errors and omissions insurance purchased by publishers, broadcasters, advertising agencies, authors, entertainment companies, and other businesses that create or provide content. It is usually written on claims-made policies, but some occurrence forms are available. Media liability insurance is often included in a cyber liability policy.
Most media liability policies cover specified torts, meaning they cover the types of torts listed in the policy. Policies vary widely, and torts covered by one policy may not be covered by another. Some policies cover many torts while others cover a few.
Here are some of the torts that are often covered under a media liability policy:
- Libel, slander, defamation, product disparagement, and trade libel
- Invasion of privacy: a collective term that includes four separate torts: intrusion upon seclusion, misappropriation of name or likeness, public disclosure of private facts, and false light
- Negligent intentional infliction of emotional distress, outrage or outrageous conduct
- Infringement or dilution of trademark, slogan, trade name, trade dress, service mark, or service name
- Copyright infringement, plagiarism, or misappropriation of ideas
- False arrest, detention or imprisonment, abuse of process, or malicious prosecution
- Wrongful entry or eviction, trespass, or invasion of the right of private occupancy
Defense and Claim Settlement
Virtually all media liability policies include defense coverage. This means they cover the cost of investigating, defending, and settling claims filed against an insured party. Some policies cover defense costs outside the limit while others include those costs within the limit. The cost of defending a media liability claim can be substantial, and expenses add up quickly. Be sure to purchase an adequate limit of insurance. This is especially important if your limit will be reduced by defense costs.
Many media liability policies include a consent-to-settle provision, which states that the insurer will not settle a claim without your consent. Unfortunately, this provision is often followed by a "hammer clause."
A "hammer clause" imposes a penalty if you refuse to agree to a settlement that is mutually acceptable to the insurer and the claimant. A typical hammer clause states that if you refuse to accept a settlement proposed by the insurer, the amount the insurer will pay for the claim will be reduced. For instance, the insurer may pay no more than the amount of the proposed settlement plus a percentage (such as 50 percent) of the damages and claim expenses that exceed the proposed settlement amount.
Limits and Deductible
Media liability policies often contain a deductible (or retention) that applies to each claim. The deductible represents the amount that you must pay out-of-pocket. It may include both damages and claim expenses.
Many media liability policies include two limits: a "per claim" limit and an aggregate limit. The "per claim" limit is the most the insurer will pay for a single claim or a group of related claims. The aggregate limit is the most the insurer will pay for all claims made during the policy period.
Here are some exclusions that often appear in media liability policies. This is not a complete list.
- Criminal Acts. While criminal acts are generally excluded, your insurer may defend you against a criminal allegation until you are found guilty by a judge or jury, or you admit to the crime.
- Bodily Injury or Property Damage. An exception may apply to claims alleging emotional distress that results from a covered tort.
- Price Fixing, Racketeering, Securities. Most policies exclude violations of anti-trust, anti-racketeering, and securities laws.
- Patent Infringement.
- Breach of Contract. Many policies include an exception for a breach of a confidentiality agreement you have made with a source.
- Employment Practices. Excludes claims for discrimination, harassment, and other employment practices
Other Important Provisions
When you are shopping for a media liability policy, there are a few additional provisions you should consider. First, be sure the definition of "loss" or "damages" in the policy includes punitive damages. Secondly, look for a policy that contains a retraction clause. This clause typically states that you (the insured) have sole discretion to decide whether to correct or retract content that has already been distributed.
Thirdly, most media liability policies limit coverage to torts that arise from specific types of activities. These may be described in a defined term such as "media activities." Examples of covered activities typically include the gathering, creating, publishing, or broadcasting of content. When choosing a policy, be sure the policy covers your company's activities.
Finally, content publishers or distributors may be hit with an injunction ordering them to stop publishing or distributing some type of content. Some policies cover the cost of complying with an injunction.