Producers, distributors, and marketers of creative content are vulnerable to legal risks, such as claims of copyright or trademark infringement, plagiarism, defamation (i.e., libel for written works, slander for audio or audiovisual works), misappropriation of a public figure or private person’s name, likeness, or other personal attributes, invasion of privacy, and other claims – both legitimate or spurious – that can diminish the value of a creative work. This is especially true as a creative work achieves greater distribution or greater popularity or attention. Media liability insurance, a specialized type of errors and omissions insurance (commonly abbreviated as E&O), provides production companies, broadcasters, publishers, marketers, advertisers, and others in the digital media and entertainment industry with coverage against these types of claims. With more than half of Americans reporting having listened to a podcast and around 90 million people being monthly listeners, the excitement around podcasts has already given rise to a flourishing, diverse, and investment-rich industry that’s only expected to grow. As podcasts become more widely distributed, the risk of content related claims increases and producers, distributors, and marketers are increasingly looking to media liability insurance coverage to mitigate those risks.
Coverage Limits and Basis
The most typical E&O policy for podcasts and other media provides coverage on an occurrence basis with limits of $1,000,000 per occurrence, and $3,000,000 in the aggregate. In other words, the insurer will cover costs and damages up to $1,000,000 per claim made against the primary insured party (i.e., the production or distribution company or advertiser) or an additional insured party during the coverage period (also referred to as the policy term), and up to $3,000,000 in total for all claims made and paid out during the coverage period, with respect to content first disseminated or distributed during the coverage period. An “occurrence” policy covers claims for incidents or damages that occurred during the coverage period, regardless of when the claim was actually made, whereas a “claims made” policy only covers claims made during the coverage period for incidents or damages occurring during the coverage period.
Most E&O policies have a self-insured retention, typically of $10,000, which is how much the insured must pay before the insurer will respond to the claim for the remaining amount, up to the policy limits; this differs from a deductible, where the insurer will cover the full cost of the claim and then seek reimbursement from the insured for the deductible amount.
The annual premium (i.e., the amount the primary insured party pays for coverage) for an average E&O policy is typically between $3,000 and $7,000 per year and varies based on the following factors:
- Coverage Terms: The coverage terms and limits provided above are fairly standard for podcasts but the policy premium will certainly increase if higher coverage limits or a lower self-insured retention or additional non-standard terms through an endorsement are sought.
- Budget and Revenue: The higher the gross production budget and anticipated revenues for the production, the higher the premium tends to be.
- Genre: The nature of the content will make a production more or less prone to claims. For example, an investigative true crime podcast may be more likely to be sued for defamation or invasion of privacy from suspects or victims than, perhaps, a more innocuous production, such as a podcast about food and wine.
- Clearance and Risk Management: Putting in place content clearance and risk management policies may mitigate the likelihood, frequency, and impact of claims, for example, a record company or music publisher demanding fees for including unlicensed music in the production, a writer claiming copyright ownership in a commissioned but unassigned work of authorship, or a guest claiming partial right to their contributions to a podcast episode or suing for the use of their name and likeness in the episode or its promotion.
- Executive Producer’s Experience: An insurer or broker is likely to be reassured that those clearance and risk management practices will be thoroughly and reliably followed by an executive producer with greater industry experience than a novice who might be unfamiliar with legal implications and standard industry practice.
- Engaging an Attorney: An experienced attorney consulting on rights clearance and First Amendment considerations mitigates the risk to both the insurer and the insured.
- Number and Length of Episodes: The more content there is to cover, the higher the risk to the insurer, which will pass that cost on to the primary insured party as a higher premium.
Finally, be mindful of who needs to be named as insured parties on the insurance policy. Insurers will extend coverage to “additional insureds” at the request of the primary insured. The primary insured and its parent, subsidiary, and affiliate companies and all of those entities’ respective officers, directors, members, managers, employees, contractors, agents, successors, and assigns should all be covered under the policy. Additionally, co-producers, licensors, promotional partners and sponsors, advertisers, talent, distributors, and others may require in their contracts be named as additional insureds so be sure to read the fine print.
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Cowan, DeBaets, Abrahams & Sheppard LLP has extensive experience counseling clients in the digital media and entertainment industries on risk management, intellectual property licensing, and content clearance, and represents podcasting studios, distributors, advertising networks, creators, celebrities, and media companies, with a focus on cutting-edge development, financing and distribution transactions for scripted and unscripted podcasts.