Publishing is a risky business. Ask Lyle Stuart, publisher of Barricade Books, whose company faces extinction because of a $3.1 million defamation award in a suit brought by Las Vegas casino king, Steve Wynn, over catalog copy for a book linking Wynn to the mob. While Barricade Books could probably overturn the damage award on appeal (because Barricade carried no libel insurance), the likelihood of an appeal appears slim.
Though Lyle Stuart made a business decision not to insure against publishing perils, fortunately there are special policies that will pay the cost of defending your right to speak freely.
Media perils policies are available to publishers and authors to protect against intellectual property and libel claims. These policies generally cover claims of copyright and trademark infringement, invasion of privacy, and defamation. Some policies even cover claims of misappropriation of ideas, as well as a number of other media perils. Most of these policies also cover the costs of defending a lawsuit, including attorney’s fees and court costs.
What Should I Look for in a Media Perils Policy?
Insurance policies vary widely. It is important to emphasize that comprehensive general liability insurance policies, that most business firms carry, do not cover the type of claims discussed in this article. When obtaining a media perils insurance policy, there are several questions that you always need to ask.
1. Does the Policy Cover Attorneys’ Fees?
Always find out whether the policy will provide coverage for legal fees and defense costs in addition to payment of a damage award. Some policies have defense costs within the limit of liability, while others offer defense costs in addition to the limit of liability. Other policies require you to obtain approval before incurring any attorneys’ fee or expenses. In addition, it is a good idea to find out whether the policy requires the insurance company to defend a lawsuit against you. If it does, the insurance company has to provide a lawyer to defend lawsuits. This can save you a lot of money in legal fees.
2. Does the Policy Cover Punitive Damages?
Another key point to investigate is whether the insurance policy covers punitive or exemplary damage awards. Some states, such as New York, do not permit insurance companies to insure you against punitive damages. Because an award of punitive damages may be substantial (sometimes even more than actual damages and attorneys’ fees), where permissible, you should make sure that your insurance policy will cover any punitive or exemplary damage award.
3. Does the Policy Require a Lawyer’s Opinion?
Many insurers will not issue a media risks policy unless the publisher, or author, provides an opinion letter from a publishing lawyer analyzing the risks of a lawsuit. Find out whether you will need to provide such a legal opinion letter because the cost of hiring a lawyer to review your manuscript and write an opinion letter can be significant. The cost of obtaining the legal review and opinion should also be taken into account when comparing policies and their rates.
4. What Types of Claims Are Covered?
It is important to speak with an insurance broker familiar with this type of coverage to find out exactly which types of claims are covered and which are not. For example, some policies cover claims of intentional infliction of emotional distress or misappropriation of ideas, while others do not. Other insurance policies offer optional coverage, for an additional fee, for claims for bodily injury or property damage resulting from negligent advice or instructions.
All writers and publishers should obtain a policy that covers, at a minimum, claims of libel, slander, invasion of privacy, invasion of the right of publicity, trademark and copyright infringement, and unfair competition. Obviously, the more types of claims covered, the better the policy. Many insurance policies exclude certain claims, such as those alleging intentional or malicious acts, from coverage. It is important to find out what types of claims are excluded. Keep in mind that you will have to bear the cost of defending these claims yourself.
5. Which Versions of the Work Are Covered?
You should investigate whether the insurance policy will cover more than one version of your work. If your work will be published in hardcover and paperback forms, make sure the insurance policy will cover both versions. Additionally, find out whether the policy covers condensed versions, serializations, or audiocassette versions of your work. Similarly, you should find out if coverage extends to book jackets, flap copy, press releases, advertising and promotional materials (including catalogue copy), and personal appearances.
6. Where Is the Policy Effective?
It may seem like a simple question, but many policyholders fail to ask whether their policy covers claims outside the United States. Most insurance policies cover claims only brought in the US. If your work is going to be distributed outside of the United States, you’d better make sure that your insurance policy will cover claims and lawsuits brought in any country where your work is sold, or translated.
7. Is the Policy a “Claims Made” or “Occurrence” Policy?
There are two types of insurance policies: “claims made” policies and “occurrence” policies. A “claims made” policy covers claims made during the policy period, whether or not the actual activity which gives rise to the claim occurred before the policy came into effect. An “occurrence” policy covers material published during the policy period. If your policy is a “claims made” policy, and a lawsuit or claim is brought the day after your policy expires, the insurance policy will not cover the claim even though the acts giving rise to the claim occurred while your policy was in effect. Alternatively, with an occurrence policy, it doesn’t matter when the claim is made. As a rule, you should avoid “claims made” policies.
Insurance Policy Prices
The premiums for media insurance policies vary depending on the nature of the work and the likelihood of a claim. The premiums generally take into consideration several factors, including:
- The nature of the work. For example, the premium for a work of science-fiction may be less than that for an investigative report or expos‚ since there is less likelihood of any libel claims.
- Whether releases and copyright permissions have been obtained. Where appropriate permissions and releases have been secured, there is reduced risk of lawsuits.
- Whether any claims have been threatened.
- The amount of coverage sought and the amount of the deductible, if any. As coverage goes up, so do the premiums, but as deductibles go up, premiums go down.
- The revenues you expect to derive from the sale of your work. This makes it important to purchase a policy with a “flat” premium that is not subject to audit.
- Whether the work has been reviewed by a publishing attorney. Most insurers allow rate card credits to authors and publishers who have their manuscripts reviewed by a qualified publishing, or first amendment, attorney.
Points to Consider
While not an exhaustive list, here is a checklist of points to explore when reviewing, or comparing, media perils policies:
- What types of claims are covered?
- What is the period of coverage?
- What is the deductible and the limits of coverage for each claim?
- Are legal fees and defense costs covered separately or in addition to the maximum policy coverage?
- What are the conditions for coverage, i.e., is prepublication review and an opinion letter by an attorney required?
- Who is covered (publisher, author, or both)?
- Is there an additional charge or fee for naming an author as an “additional insured” party?
- Are lawsuits outside the United States covered?
- Is the policy a “claims made” policy or an “occurrence” policy?
- Does it cover translations or other editions of the work (e.g., mass market paperback, trade paperback, special editions, electronic editions, etc.)?
- Are punitive damages covered?
- Do you have the right to have your own attorney represent you or does the insurance company require their attorney?
- Can the insurance company settle a case without your approval or do you have the right to approve all settlements?
This article was excerpted from the forthcoming book, The Copyright Permission and Libel Handbook (John Wiley and Sons, Inc.).
(c) 1998. Lloyd J. Jassin and Steven C. Schechter. All Rights Reserved.
This article is not intended as legal advice, and the authors assume no responsibility for actions taken based on the information contained in this article. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
Lloyd J. Jassin is a publishing and intellectual property attorney in private practice in New York City. Steven C. Schechter is a media and entertainment law attorney, based in Fair Lawn, NJ.
This article is from thePMA Newsletterfor January, 1998, and is reprinted with permission of Publishers Marketing Association.