PUBLISHED JULY/AUGUST 2020
answers by Mike Mansel
, MA, Certified Insurance Counselor, Aegis Insurance Markets --
Certified insurance counselor, Mike Mansel, breaks down all you need to know before buying publishers liability insurance.
What are some of the missteps publishers take when buying publishers liability insurance?
The biggest mistake is for publishers to go to a “generalist” agent who, though highly professional, may have handled perhaps one other publisher or author in their life. When this happens, the well-meaning agent will go to what we call a “surplus lines or wholesale insurer” who will offer what appears to be a good quotation but on what we call a “claims made” basis, and the publisher is not aware of the pitfalls or such a policy.
An occurrence policy obligates the insurance company to pay for claims arising out of occurrences that occur during the policy period regardless of when the claim is reported. The policyholder is covered for any covered media event that occurs during the term of the policy regardless of when the claim arising from the incident is reported to the company. In some situations, the claim might be made many years after the incident occurred.
Example: Policy written and premium paid for the issued annual policy. No further premiums are charged. Several years later, a covered claim (occurred during the policy period) is brought against the insured. The occurrence policy responds to the claim.
A claims-made policy protects an insured against claims or incidents that are reported during the policy period, and only during the policy period for which premium payment has been made. For coverage continuation, a claims-made policy must be renewed each policy year, and a premium paid for each renewal.
How can publishers find affordable publishers liability insurance?
Naturally, “affordable” is subjective. The easiest way to obtain affordable media liability is to work with an experienced media insurance professional. Additionally, the publisher must make sure that all the publisher risks have been responded to: permissions, consents, strong publisher/author agreement, etc. Additionally, the publisher needs to make sure that there is little likelihood for claims arising from defamation, invasion of privacy, copyright and/or trademark infringement, plagiarism, piracy advertising injury, infliction of emotional distress, and, among other perils, that the text will not cause contextual liability or defective advice claims.
How does sales revenue impact a premium?
Premiums are based on many, many factors, of which one is “estimated sales revenue.” The theory is that the more sales of the work the greater the chance of claim, but that’s not always true. We find that publishers/authors tend to overestimate sales not realizing how much competition is out there.
What are the key features someone should look for when buying publishers liability insurance?
Fair pricing, an insurer with a history of media liability with a good claims reputation, an occurrence form, and doing business with a media insurance professional. How much and how many publishers/authors does the agent handle? What is their reputation? References? Does the agent know what vetting is? Does the agent now that fiction can be higher priced than true crime?
How much might a small publisher pay for publishers liability insurance?
There is really no way to respond to this question since the premium is based on so many factors: type of work (fiction, poetry, true crime, religious, and so many other types of material). The problem with most seekers of media liability is that they expect the premium for $500,000 or $1 million limit of insurance to be about $500. They forget that they are dealing with complex media laws and that the limit of insurance including the cost of defense by a media lawyer is at a minimum $475 per billable hour and any settlement, judgement, or verdict. For a modest publisher with minimal claim/legal exposure, the premiums run from about $2,000 to $2,500 to start depending on revenues for a $1 million insurance policy occurrence form where the protection for one book is for the life of the book.
Mike Mansel, MA, is a certified insurance counselor with Aegis Insurance Markets. He is a highly experienced and respected insurance and risk management professional who has been involved in providing expertise to commercial and business clients since 1977.