|Media & PR Consultants|
Advertising agencies, publishers, broadcasters, multimedia companies, public relations firms, sales promotion companies, direct marketing agencies and indeed any organisation operating in the broad worlds of media and marketing fall into the 'media' sector for professional indemnity insurance.
These areas of business used to be treated in PI terms as another 'miscellaneous' business. PI policies require that a third party claim be made for a loss, which, for the media industry would almost always be financial loss, arising as a result of the neglect, error or omission of the insured.
However in reality, media professionals will normally be in a position to fix the problem before it ever becomes apparent to their client. Alternatively, they might waive an outstanding bill or issue credit notes so as to preserve commercial relations with their clients. The end result is no third party claim for damages and therefore, under most policy wordings, no valid professional indemnity claim.
For this reason, it is essential that a suitable media wording is used and that the correct advice is sought when purchasing cover, which is when a specialist PI consultancy can be of significant benefit. Cover should provide rectification and irrecoverable fees cover. These heads of cover are often referred to as 'first party' cover and require specialist claims attention.
How do insurers rate a risk and what do they look for?
Due to the nature of the sector, the principals may not be qualified in the formal sense, so sight of a CV is a normal requirement unless the business has been trading for a while.
A media proposal form asks for a detailed split of business. Some activities are more hazardous than others. Here are some examples:
Production of advertisements
Example: An advert involved a song which sounded like it was sung by someone with a stammer. The advertising agency was warned by the IBA that it was close to the mark. Once finalised, the IBA decided that not enough had been done to adapt the song. The client refused to pay the agency. Cost to insurers: £140,000.
Media planning and buying or 'media spend'
Example: Advertising space was supposed to have been booked in the national press for a series of adverts for the Easter sale of a chain of retail stores. The bookings were made for the wrong four week period i.e. one week before Easter and three weeks after. The firm refused to pay for the media spend and also claimed financial loss for the loss in revenue from the sale. Cost to insurers: £185,000.
Design and production of printed literature and documents
Example: A media company was producing a price listing for a chain of pubs in Scotland and England. The pricing for England should have been more expensive than for Scotland. The list had the Scottish prices for England and a claim was made for lost revenue. Cost to insurers: £45,000.
Direct marketing including mailshots
Example: A business produced wrongly addressed mailings and incomplete mailing packs. Cost to insurers: £120,000.
Example: The well known Hoover holiday offer.
Marketing including market research
Example: A market researcher had data encoded by a specialist firm who misinterpreted the instructions. The resulting report was not checked and the client made a claim for the delay and the cost of re-coding the data. Cost to insurers: £35,000.
Example: A PR firm was involved in a campaign for a car manufacturer's new marketing strategy in respect of its new special service contract. The product was badged with a name that was subsequently found to have been used before by another car company. A claim for breach of copyright was made and the strategy had to be withdrawn. Cost to insurers: £250,000.
Examples: Libel, infringement of copyright. Errors in publication - e.g. formula, design, etc., withdrawal costs.
What should you look for in professional indemnity insurance?
Make sure you get the cover you need. Provide insurers with a description of your business making sure it is accurate. The media industry is truly worldwide in its nature, and you should recognise that if you have any US exposure, it is generally excluded, and while it is possible to arrange US cover, different terms will apply.
The high hazard areas are primarily direct marketing and sales promotion risks, and normally a different proposal form or at least an additional questionnaire will be required. For this reason, it is worth disclosing this at the point of enquiry.
Many media firms use sub-contractors and suppliers in order to fulfil their contracts. They normally contract as principals with their clients and therefore, will be in the firing line even where the problem has been caused by an errant sub-contractor or supplier. It could be useful to seek indemnities from such consultants and ideally, they should have their own PI policies in force to deal with claims that the insurer wishes to subrogate.
Often media firms will use self-employed suppliers who will, to all intents and purposes, be working for the insured business as an employee. In such cases media policies will normally deem such persons as employees and therefore waive subrogation rights.
Wordings can differ from insurer to insurer if you are exposed to, say, bodily injury or environmental claims. Check that these aren't excluded or restricted within either the basic wording or any applicable clauses. If cover is restricted, shop around to find a wording appropriate to your business profile.
The usual cover
The normal heads of cover are:
The usual exclusions
Typically, media policies will exclude things that should have more specific insurance:
There are exclusions that are specific to the media industry:
Presenting your proposal for insurance
The presentation of your business to insurers is very important both in respect of the facts i.e. the things for which cover is required, and the way in which you do your business, both of which influence an insurer's perception of your business and the risk it poses to them.
We would always recommend that in addition to the proposal form you are asked to complete, you provide supporting documents with your proposal such as:
Don't forget to include the names of any businesses with which you have merged, or any that you have acquired, as these will need historic cover. Likewise you may have ceased to offer certain services for which cover is still required.
Keep a written record of all requests for cover to be extended and any historic or material changes to your business. This information can be updated each year and provided as an addendum to the proposal. Any certification the business may have i.e. accreditation by a governing or standards council, is also well worth disclosing.
Keep your presentation neat and tidy. Bear in mind that an untidy presentation may be construed as an untidy business. Allow yourself time to complete the presentation and remember that a hard copy always look better that a faxed one sent in at the last minute.
The Professional Indemnity Insurance market is relatively small so at the point of renewal, concentrate on asking only one or two specialist brokers to quote. Bombarding the market with requests can result in your proposal being locked out of some markets.
Renewal is an ideal time to review your insurance requirements. As your business grows and your contract values increase, it is wise to consider what could go wrong and how much it may cost to settle a claim - and also cover the attendant legal costs. Some policy wordings provide a limit of indemnity with legal costs in addition to the limit. Others provide limits of indemnity which include the legal cost. However, the cost of litigation is high and can eat into the limit of indemnity provided if costs are inclusive.
Many professionals are obliged to carry PI by their professional bodies. Many of these bodies not only have specific requirements in respect of policy wording but also on the limits a professional must carry and the excesses they are allowed. Renewal is an opportune time to check your cover both in respect of your own requirements and those of your professional bodies.
Download and return a signed copy of this PI Proposal Form
|Choose your Profession|
|Online PI Quotes|
|Submit Proposal Form|
|Register Renewal Date|
|Directors and Officers|
|Employment Practice Liability Insurance|
|Run Off PI|
|DAS Legal Expenses Cover|
|PI Fact Sheets (New)|
|Register your Renewal Date|
|Submit Your Proposal Form|
|Hammond Legal Resources|
Click on the image below to download our proposal form.
Once completed you can upload the proposal form here or by logging in and using the Manage Proposals section to the left.
Like and follow us on Facebook, Twitter and LinkedIn in order to stay up to date with the latest news relating to Professional Indemnity.