The UK is a world leader in advertising, with agencies contributing £21bn to the economy every year and employing over 100,000 people. But the industry has changed almost beyond recognition in recent years, with the Internet and mobile completely changing the game. Print, broadcast and outdoor still play their part but digital now makes up 95% of advertising spend, while mobile accounts for 38% of all digital advertising.
Traditional agencies have had to evolve quickly, while new players have stormed the market, stealing market share. Creativity is still at the core, but technology is now an essential part of the advertising process. Getting hold of the right data and knowing how to use it is central to reaching and engaging your target audiences, hitting them at the right time and measuring success.
This dramatic shift in approach means ad agencies are facing new risks and must think carefully about buying the right insurance protection. Here are the main policies you should consider:
Professional indemnity insurance (AKA errors & omissions)
It's your job to come up with big, new and sometimes controversial ideas. But what if they don't work out, and your client doesn't get the results they expected? Worst case scenario, you could face a legal claim and compensation, which is where professional indemnity insurance (PI) comes in. Designed for any business offering a professional service or advice, PI will protect you if:
You make a mistake, or if a client suffers – or claims to suffer – a financial loss as a result of your work. If this happens, PI will cover your legal expenses and compensation costs.
You infringe industry regulations. For example, if your work includes television commercials, the contractual obligations of the commercial producer are defined by the APA/IPA Production insurance briefing schedule (PIBS) - failure to meet these obligations could result in significant costs and penalties. In situations like this, PI will cover your defence costs and resulting fines, many of which are insurable.
You become involved in an intellectual property dispute - whether protecting your own IP, or defending an infringement of somebody else's. That could be using images or music without permission, or infringing on another company's branding or logo.
Finally, you may also find that clients insist you have PI – so it could even help you win business (or not lose it!)
Media liability insurance
The luxury of time is a thing of the past in advertising, with news and trends spreading online and around the world in an instant. Agencies need to have their fingers on the pulse, to respond quickly to shifting sands, but that can also make mistakes more likely.
Similar to PI, media liability insurance is designed for the unique needs of media and advertising businesses, protecting you for infringement of intellectual property, breach of confidentiality or right to privacy, breach of comparative advertising regulations, slander or making false or misleading claims. So, if you're faced with a #fail on social media, a client's website, or another online or offline channel, any legal claims and compensation will be covered.
Cyber liability insurance
Innovative technology and data are central to any modern advertising agency. From managing research, to implementing digital and mobile campaigns, or running social media accounts, there are numerous areas where a cyber-attack or data breach could have serious consequences.
The recent Government Cyber Security Breaches Survey found that nearly half of businesses (46%) were hit by at least one cyber-attack in the last year, including fraudulent emails (72%), viruses and malware (33%), people impersonating the organisation online (27%) and ransomware (17%). In cases like this, cyber liability insurance protects you for:
A breach of data protection laws (where insurable by law)
Your liability for handling data
Extortion and system rectification costs
PR expenses and financial loss due to system downtime.
Directors & Officers liability insurance (D&O)
Directors and officers is also one of the most important insurance policies an advertising business can buy, covering allegations that you have personally done something wrong in your role as Director. Many founders don't realise that, even in a limited company, you can still personally face legal action, fines, or even prison sentences! You can also be disqualified from being a company director. Furthermore, investors often ask about D&O as part of their due diligence process, so getting it sorted early shows you take your responsibilities seriously.
Employers' liability insurance
In advertising, your people are everything. So, as soon as you take on staff – whether on permanent, part-time, freelance or contract basis - you are legally required to have employers' liability insurance. EL will cover you if an employee claims they sustained an injury or became ill as a result of working for you. It will also help you avoid potentially expensive fines to the Health and Safety Executive, whose job it is to ensure you fulfil your responsibility as an employer.
Public liability insurance
Public liability insurance is another basic requirement, protecting your business if you or one of your team causes injury or property damage to a third party. For an advertising agency, you could be at risk while out shooting your latest video or TV ad, implementing a quirky stunt or simply visiting your clients' offices, or attending industry events. Even if you're mainly office based, PL is an important investment.
Your valuable equipment also needs protecting, whether that's a simple laptop, camera, or filming equipment. Contents and equipment insurance covers everything in the office, including your fit-out, computers, office equipment, furniture and documents. You should also consider portable equipment insurance, which covers everything you and staff take out and about with you, such as laptops, mobiles, cameras and tablets.
Advertising is a ruthlessly competitive industry, where only the smart and tenacious survive. At least with the right insurance in place, you have a few less things to worry about. To discuss your risks and insurance needs in more details, drop us a line at firstname.lastname@example.org, or give us a call on 0333 772 0759.
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