Insurance nomenclature can often be confusing. For example, what is an “inland marine policy”? Sounds somewhat contradictory to me. And just what is covered under an “advertising agency professional liability policy” as opposed to an “advertising agency E&O policy”? Are they the same, and what do they do?
To start, a general liability insurance policy’s primary coverage grant is for bodily injury and property damage liability. But unlike the treatment for most businesses, a general liability insurance policy does not provide coverage for libel, slander, defamation, copyright infringement and like wrongful acts “committed by an insured whose business is advertising … publishing … or designing or determining content of websites for others.” And no coverage is provided for an advertising agency’s professional services. So, basically, an advertising agency’s general liability insurance policy provides coverage only for bodily injury and property damage liability. This leaves three big coverage gaps for advertising agencies as follows:
- Coverage for the complaints brought by persons/organizations other than your clients from your creation or procurement of content that is used in advertisements and the associated dissemination thereof. For example, a photographer may bring a complaint that you did not have authorization to use one of his copyright-protected photos in an advertisement that you created for one of your clients. Although there are various names for this coverage (depending on the insurance company involved), this is most commonly referred to as advertising liability insurance.
- Coverage for complaints brought by your clients asserting that you were negligent with respects to your professional responsibilities and services. For example, a client has engaged you to manage a Google advertisement placement with instructions to place $500 of advertisement for 10 consecutive days when — Whoops! — you place $5,000 of advertisements for 10 consecutive days. This is most commonly known as advertising agency errors & omissions liability insurance.
- Coverage for complaints brought by clients that the website that you were engaged to construct and bring online has failed to perform as promised. In this situation, an e-tailer has engaged you for a multifaceted campaign, including the construction of a new website, which, after delivery, repeatedly crashed during the holiday season because of an inability to handle traffic. Coverage for such matters is provided under what is most commonly referred to as a cyberliability insurance policy (also known as a technology services liability insurance policy).
Advertising liability insurance and advertising agency errors & omissions liability insurance are most often provided in tandem under an advertising agency professional liability insurance policy, while cyberliability insurance is predominantly provided under a separate stand-alone policy (although can also be provided by endorsement to an advertising agency professional liability insurance policy in some circumstances).
There are also certain other insurance coverages (of course) to address somewhat tangential exposures. For example, network and data security and privacy insurance provides protection for the policyholder for, among other things, unauthorized access by third parties to protected personal information of employees, clients or others held on file in your network. And social engineering fraud insurance protects the policyholder for its incurred financial losses from the misappropriation/theft of funds through transactions that are fraudulently induced via electronic communications.
Coverage availability and pricing are subject to underwriting. Preston-Patterson is licensed in all states and Washington, D.C.
Contact: Stephen W. Patterson, MBA, CPCU, email@example.com, 800-516-5199 ext 111