roducers, 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.
Self-Insured
Retention
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.
Policy Premiums
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.
Covered Parties
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.
* * *
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.
Filed in: Legal Blog
July 22, 2019