Every company uses some form of advertising to communicate and reach their customers about their product or service. Advertising aims to influence, inform and persuade customers or clients.
Advertising can include video adverts, billboards, Google adverts and a range of social media advertisements. When advertising is right, it has many benefits for companies, from an increase in customers (sales & demand) to brand image promotion.
Advertising to the public brings many eyes from various companies and public members who may have a legal problem with your business advert. Companies must follow different advertising laws, but a company may accidently breach these laws or advertising duties. Therefore, advertising in any form comes with risks and possible lawsuits.
Hence, any company, especially advertisers, needs insurance to protect its promotion efforts. The insurance is advertiser liability insurance. The article will explain advertiser liability insurance and the crucial coverage for advertisers.
What is Advertisers Liability Insurance?
Advertisers liability insurance is a professional indemnity policy that covers advertisers liability while performing their duty. The insurance protects against liability lawsuits that may arise from another company or the public.
A company may believe your advertisement may cause them financial loss or disturb their brand’s activity. Lawsuits could be due to accidental slander, infringement, libel and more. (The article will explain in detail the coverage.)
Consequently, the insurance will cover the cost of legal defence, compensation and settlement costs related to the advertisers liability claim. The policy is mainly for advertising companies, but any company can purchase the insurance with a lot of promotion activity.
What Does Advertisers Liability Insurance Cover?
Infringement
Advertisers oversee numerous advertising campaigns and focus on creating the best work for their or client’s company. All advertising efforts need to be unique and original.
Unfortunately, there is always a chance advertisers might accidently infringe copyright laws. If a business believes an advertisement is similar to its brand, they can take legal action. The third-party business/competitor may accuse the advertisers of infringement of copyright and demand compensation.
Copyright infringement can include business ideas, slogans, logos, brand names, font patents or advertising styles. Advertisers liability can be at risk even if the advert is just a similar theme to the other company. For example, both companies have similar logo styles or similar creative ideas.
Advertisers liability insurance will cover most claims arising from copyright infringement. The insurance will cover the legal fees and any compensation payout. However, the insurance will not cover if the advertiser intentionally copied the other company. Hence, the insurance will not cover expenses if found guilty of breaching the copyright law.
Defamation
Defamation is false information shared that harms a company or profession. Therefore, advertisers must always be aware of defamation and slander that might be taken seriously and lead to lawsuits.
If companies believe an advertisement includes slander written or spoken towards their brand – they can take legal action. For example, a business advert promotes their product being better than a specific competitor or shares information about how competitor products are unsafe.
In most countries, defamation is against the law and is taken very seriously in advertising. Even a single social media post that spreads false information can be considered defamation. Without proof, advertisers cannot post any information, but advertisers may do this by mistake or may not intend to harm another business.
Fortunately, advertisers liability insurance will cover claims accusing the policyholder of defamation. The insurance understands that mistakes happen and will help the advertiser move on from the error with reduced financial loss. Even a clever joke can be taken incorrectly and result in a lawsuit.
Violation Of Privacy Rights
When advertisements use pictures, people, music and other content, a lot of forms need to be signed for permission and ownership. Consent is necessary regardless of the content or where the company will post it.
One missing permission signature or agreement can break laws of privacy and ownership. If a person or company believes an advert is using their private property or information without permission, they can take legal action. For example, any person can sue and demand compensation when a company uses a picture or video of them without permission.
Privacy mistakes can happen to any advertiser or company. Advertisers liability insurance will cover claims due to violation of privacy rights. The insurance will cover the legal and settlement payouts to the affected party. Using a picture of a customer in an advert may seem innocent, but it’s always better to ask for permission to avoid lawsuits.
Who Needs Advertisers Liability Insurance?
Advertisers liability insurance is essential to advertiser professionals, advertising agencies and companies that invest in many promotion activities. The insurance coverage can help protect the business or professional from advertisement liability risks.
However, it is essential to understand what the insurance will not cover and whether it fits your advertising efforts. The insurance will not cover any claims that are proven to be intentional. For instance, if proven, the advertising agency intentionally slandered its competitor to seem superior.
Additionally, the insurance will not cover any claims related to adverts posted/ promoted before the policy was bought. The insurance will only cover claims during the policy period.
Thus, having liability insurance gives advertisers the peace of mind of knowing they are covered in case their work leads to any claims. Financial protection can help the firm defend itself and recover with less or no financial loss.
To Learn More about advertisers liability insurance and protect your promotion activities in Hong Kong & Asia, contact Red Asia Insurance.
