Media Liability Insurance – New Appleman on Insurance Law Library Edition, Chapter 31

Media Liability Insurance – New Appleman on Insurance Law Library Edition, Chapter 31

By Michael J. O’Connor, Edward E. Weiman, Audrey Jing Faber, Attorneys, White O’Connor Fink & Brenner LLP

Media liability insurance covers risks typically associated with the gathering, creation, production, and dissemination of mass media.  Policies targeted toward media insureds first originated before World War II due to a perceived need for specialized coverage in light of an influx of costly defamation claims against newspapers and other print media.  Beginning with Employers Reinsurance Corporation, which issued the first media liability policy, the insurance industry realized that, for those in the media and entertainment industry, procuring an insurance policy that covered the risks inherent in the creation and mass distribution of news, entertainment, information, and other content was critical to the industry.

Mass Media

This chapter examines the history of media liability coverage, provides an overview of the coverage available in most media liability policies, and highlights specific legal issues relating to both the substantive and practical aspects of insuring media-based risks.  Section 31.01[1] provides a history of the limited coverage available for intellectual property and privacy torts under the “personal and advertising injury” coverage of the typical general liability policy. Section 31.01[1][a] addresses the 1973 Broad Form Endorsement and the 1986 standard form and makes clear that, in order to trigger coverage under these policies for a content-based offense such as copyright infringement, the insured would have to establish “advertising injury,” or, in other words, a direct causal relationship between the insured’s advertisement of its goods, products or services, and the alleged injury.  Moreover, these form policies expressly excluded coverage for “advertising” injury arising out of an offense committed by an insured who was in the business of advertising, broadcasting, publishing or telecasting.

As set forth in Section 31.01[1][b], successive revisions of the standard form further narrowed coverage under the “advertising injury” provisions, requiring that the enumerated offense occur in the insured’s advertisement.  As Section 31.01[1][c] explains, media insureds seeking coverage for torts such as defamation fared no better under narrow “personal injury” provisions, because the standard policy similarly excluded coverage if the injury arose out of an insured’s advertising, publishing, broadcasting or telecasting.  In addition to these narrow coverage provisions, the standard form later also included exclusions directed specifically to media-related risks.  These exclusions, including the standard form exclusion for “Insureds in Media and Internet Type Businesses” and a commonly issued “Field of Entertainment Limitation Endorsement,” are addressed in Sections 31.01[1][d] and 31.01[1][e].

Section 31.01[2] details a number of key considerations for any prospective insured seeking to obtain media liability coverage.  The completion of an insurance policy application, discussed in Section 31.01[3], is an integral part in this process.  The insurance company relies on the information in the application, including statements regarding the insured’s business and legal practices, to underwrite the risk.  In this regard, an insured must ensure that the representations it makes in the insurance application are true and accurate, because false representations, in some cases, may permit the insurer to rescind the policy.  Sections 31.01[3][a] and 31.01[3][b] discuss particular representations that an insured may be asked to make in its policy application, and the insured’s duty to answer requests for information truthfully.  As set forth in Section 31.01[3][c], an insured has a duty to amend its application in order to avoid making false representations, or risk the consequences discussed in Section 31.01[3][d].

Section 31.02 provides an overview of the general characteristics of a media liability insurance policy, including a sample insuring provision and common definitions.  Because media liability policies are manuscript policies, these provisions may vary from policy to policy, and insurer to insurer.  Nonetheless, these policies do share certain common characteristics.  Sections 31.02[1] through 31.02[6] describe some of the more common provisions and definitions that may appear in a media liability policy.  Section 31.02[7] discusses limits of liability, retentions, and deductibles, the amounts of which will vary depending on an insured’s particular coverage needs, loss history, and risk management strategy.  Limits of liability at the primary layer may range as high as $20 million or more, and may be applied on a per occurrence basis or as an aggregate across the entire policy.  Retention and deductible amounts may similarly vary from policy to policy.

Section 31.02[8] addresses the specific conduct that is generally covered under a media liability policy, and the issues that may arise in the event of a wrongful act in this context.  The particular wrongful acts discussed include copyright infringement, trademark infringement, misappropriation, idea theft, piracy, plagiarism, defamation, intrusion upon seclusion, public disclosure of private facts, false light and misappropriation of name, likeness or personality.

Unlike most general liability policies, media liability policies may or may not confer a duty to defend upon the insurer in the event of a claim or suit.  Section 31.03[1] briefly addresses the distinction between an insurer’s duty to defend and its duty to indemnify.  Section 31.03[2] addresses the question of control over the settlement of a covered claim.

Sections 31.04 and 31.05 discuss common policy exclusions and conditions.  In particular, Section 31.04 addresses exclusions for intentional acts, breach of contract, and risks traditionally covered by other insurance.  Section 31.05 identifies common policy conditions, including the insured’s obligation to provide timely notice of any claim, cooperate with the insurer, and to refrain from entering into settlements without the insurer’s consent.

Finally, Section 31.06 addresses cast insurance, an ancillary form of coverage that most, if not all, production entities may want to consider obtaining as part of their overall risk management strategy.  Cast insurance covers loss in the event a production is delayed or cancelled because a leading performer or other integral member of a production team is unable to perform his or her duties.  Like content-based claims, cast insurance claims are costly, and frequently give rise to disputes over coverage.

Because media liability insurance is a relatively modern development and, thus, is not the subject of a highly developed body of reported case authority, there are a number of instances where this chapter cites to unpublished or otherwise non-binding authority in an effort to explore the manner in which courts have handled the interpretation of issues that arise in the context of these specialized policies.  Moreover, because the vast majority of case law addressing media and entertainment claims, i.e. copyright infringement and misappropriation of ideas under implied contract, has been developed by courts in the states of California and New York, this chapter necessarily focuses on the law of those states when addressing the underlying claims giving rise to insurance coverage.  Nonetheless, wherever possible, the chapter includes the law of other jurisdictions as well.

Cross Reference:  For additional analysis and guidance with respect to entertainment insurance law issues, see New Appleman Sports and Entertainment Insurance Law and Practice Guide.

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Michael J. O’Connor and Edward E. Weiman are partners in the law firm of White O’Connor Fink & Brenner LLP.  Messrs. O’Connor and Weiman specialize in entertainment and business litigation for established media clients, and also manage the firm’s media liability insurance practice, focusing on the representation of insureds in a variety of media, employment, general liability, and other insurance disputes.  Audrey Jing Faber is an associate with White O’Connor Fink & Brenner LLP, who has specialized since her admission to the bar in insurance coverage disputes for clients in a wide range of practice areas, including media and entertainment, professional liability, construction, and homeowner’s insurance, among others.

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