PF&M at a Glance
Media liability insurance
Media liability insurance insures against claims arising out of gathering and communicating information. It covers copyright and/or trademark infringement (intellectual property) in addition to defamation and invasion of privacy claims. It is sometimes also referred to as communications or multimedia liability. As such, it is categorized as errors and omissions in written or spoken form that results in claims alleging ensuing financial loss.
The coverage dates back to the 1930s when it responded to the need of newspapers for coverage against libel and slander claims. Media and non-media companies alike now disseminate information and other content through multiple channels. As a result, this coverage is now available to and used by the broader fields of advertising, broadcasting and publishing, including advertisers and advertising agencies; authors, book, magazine, newspaper and electronic publishers; television and cable television stations and operators; motion picture companies; cable and satellite broadcasters; electronic publishing services and transmission; multimedia organizations; and miscellaneous communications-related businesses.
While the news media and other publishers are primarily concerned with libel and copyright infringement claims, there has been a dramatic increase in the number and severity of media liability errors and omissions claims in the past few years. Media liability E&O claims differ from traditional claims involving libel, copyright infringement, invasion of privacy, piracy and plagiarism in that they impose liability for physical injuries or economic loss allegedly caused by errors or negligent publication of ideas or expressions in the published, broadcast or disseminated material.
New media and technology companies—including consultants providing Web site design and Internet gateway services—also have media liability exposures including, but not limited to, libel, slander, media liability, advertisers liability and security issues involving design of a Web site for a client. Security liability can arise from many sources, including misusing e-mail and credit card fraud. To further complicate the issue, both the Web site designer and the client face exposures from outsiders who access the Web site. And all this is on top of the traditional liability that faces consultants for duties they owe their clients!
Because this form of insurance is not standardized, several approaches and a number of optional coverages are available, depending on the carrier. Only certain named perils are ordinarily insured, usually on an occurrence basis, although a claims-made approach may be more appropriate in some cases. Defense costs may be included within the limit or in addition to the limit. The territory is usually worldwide. Exclusions are relatively few and limited because of the limited or named perils nature of the coverage provided. Common exclusions are for claims arising out of exposures within the named insured’s control, such as false advertising of its product, and claims for fines, penalties and criminal acts.
The basic coverage offered in most forms may be modified to reflect a given insured’s exposures, the insurance company’s underwriting requirements and the coverage options selected. Some coverage options currently available are:
1. Product defamation that disparages or belittles the performance or value of a product
2. Personal disparagement resulting from publishing or broadcasting operations that damages a community or business activities
3. Laptop theft
5. Privacy regulatory actions and fines
6. Crisis management/privacy notification expenses
7. Confidential source
8. Contingent bodily injury/property damage exposures in addition to privacy/security exposures
10. Advertising injury/personal injury enhancements that fill the gap between general liability and professional liability coverage forms and policies
The media liability insurance application is the basis for determining the coverages to be provided. For this reason, it must be completed carefully and completely and signed by the named insured or its authorized representative. The premium charged is largely based on the limit of insurance, the retention or deductible amount and the optional coverages selected. Rating bases vary but, in many cases, are based on hourly time charges for radio and television stations, the number of subscribers for cable television operations, sales for book publishers and circulation for newspaper and subscription publishers. As technology expands and new media formats appear, new and different rating bases are also likely to appear.
The premiums charged are also affected by information provided in the application and related questionnaires and risk management measures the named insured employs to reduce exposures. Previous claims, incidents and overall loss experience have a significant impact on the underwriting acceptability of a given risk and the pricing that applies to it.
Please note that this is only a brief overview of the coverages available in this program. The PF&M Analysis from The Rough Notes Company, Inc., contains broader and more thorough analyses of this and other related subjects. Producer Online subscribers can refer to PF&M Section 360.4-2, Media/Communications Liability Coverage Analysis, for a detailed analysis and additional information on this subject.