The past few months I’ve been actively searching for Media Liability Insurance to protect my U.S.-based company from any lawsuits arising from the portfolio of niche websites I own and operate.
From 2018-2019, I was involved in a copyright lawsuit that has strengthened my resolve to obtain coverage. I cover my story below and how I was not at fault but still had to settle. A bad situation for for both parties involved!
In the past, I had insurance via Hiscox, and they recently excluded media liability and thus I’ve been in the market to obtain a dedicated policy designed for niche website publishers.
This is what I cover in this write-up:
- My story of getting sued
- What is media liability insurance?
- Media liability insurance quote review
- How much is insurance?
- Other common questions
- Do I need insurance?
The Story: I Was Sued for Copyright But I Wasn’t At Fault
Yes, I was sued for copyright infringement on a site I acquired and held for 2 months. Here is the journey:
1. Site Acquisition and Exit
I purchased the website on Flippa thinking I would grow it. However, after 2 months of not touching the website, I decided to sell it back on Flippa. I sold it to a U.S.-based individual. Usually, the story ends here for most website flips, but that was not the case.
2. Notified of Lawsuit
About 2 years post-sale, I received a private message via Flippa’s platform that the buyer of the website was sued for copyright infringement regarding an image published on the website. He settled with the copyright holder and now he wants to come after me to recoup his losses. He was alleging that I placed the image.
However, I acquired the site from the original owner who placed the image. But because I was the owner of the site at the time the buyer bought it, I was liable.
3. Settlement
The copyright holder that sued the buyer was actually a lawyer by trade. He puts out images on the web and scans for websites that take them without permission. He then uses the copyright laws to sue and settle without any discussions. At best his image is worth $300-$500 for a license, but he knows copyright laws favor the creator and uses it to his advantage. Since he is the lawyer and copyright holder, he has no cost to file a lawsuit or defend it.
This is the media version of patent trolls; let’s call them media trolls.
What is Media Liability Insurance?
Cyber and Media Liability insurance is a policy to protect you against media liabilities (e.g., copyright, slander, libel) and cyber liability (i.e., customer data loss).
It is primarily designed for online media publishing companies that own a single or portfolio of websites.
Like any other insurance, you pay an annual insurance premium and in return receive maximum liability coverage with a preset deductible per claim.
For general discussions on this topic, check out the following:
How Did I Find and Obtain Insurance?
Media insurance is a speciality insurance product. Your typical companies will not have such a product in-house, however, if they have a business insurance division in-house they can shop your requirements around.
I reached out to Farmer’s Insurance brokerage. It took a good amount of back and forth for the broker to get an understanding of the website building, investing, and flipping model.
Once the business model was understood, I filled out the requirements form which Farmer’s then shopped around through the Lloyds of London marketplace. A specialist insurance company based out of the UK, CFC Underwriting, accepted my application and provided a quote. CFC has an insurance product specifically designed for media companies.
After reviewing and going back and forth with questions (which I share below), I finalized the policy.
Media Liability Insurance Quote: Clause Review
Let’s break down the the high-level clauses of the policy. The policy includes the following “insuring clauses” for media-specific companies:
- Multimedia Liability and Advertising Injury
- Cyber and Privacy
- Court Attendance Costs
What’s not included is Errors & Omissions and Commercial General Liability, which are typical for more traditional businesses that provide advice and/or those that have employees at physical offices.
Here’s the breakdown of what’s included within each insuring clause.
Clause 1: Multimedia Liability and Advertising Injury
This is the crucial clause for website owners and flippers. This includes the following:
- Defamation: Any claims against my company for libel, slander, product disparagement, or emotional distress or outrage based on any harm to the character or reputation of any person or entity is covered. In short, I am covered for anything I write that may impact a person or company.
- IP Rights and Infringement: infringement on any copyright, trademark, design rights, domain name rights, service name, etc. is covered. In addition, the act of piracy, plagiarism, misappropriation of content, concepts, or ideas is covered. Also, failure to attribute authorship or provide credit is also covered.
- Content Liability: Anything related to negligence in terms of advice, misstatements, advice, or misrepresentation is covered within the content.
Example Use Cases
As media publishers, we put out hundreds of articles with a collection of images, videos, charts, among other elements. However, it is possible that sometimes we infringe without knowing. This clause covers anything related to the following if done by mistake:
- Using an image without permission and receiving a copyright lawsuit
- Writing a review about a company that’s honest but a lawsuit still arises because the company wants the content taken down
- Use an element inside a logo that’s trademarked (e.g., Traveller’s Umbrella logo case)
- Using a trademarked domain by mistake
- Not providing credit to an author when quoting
Clause 2: Cyber and Privacy
This covers the following:
- Cyber liability: third-party financial loss from a hacking attack or virus that causes lack of services or loss of data
- Privacy liability: includes unintentional disclosure of personal identifying information (e.g., credit card data)
- System damage: any damage arising from updating or upgrading your computer systems that result in a loss for third-parties
- System business interruption: a reimbursement for a reduction in profit during a system outage period as a result of cyber peril or cloud computing provider failure
- Threats or extortion: if threatened or extorted to share a virus, or share private information
This one was a clause that I did not have a choice of getting rid of; it’s the default but I am glad it is part of the package.
Example Use Cases
Most publishers use Wordpress as their front-end content management system. Being one of the most used CMSs out there, it has vulnerabilities. This clause would protect against:
- Your server being hacked and then used to perpetrate attacks on other people’s sites or other servers
- Your Wordpress backend is hacked and malicious scripts are installed that attack visitors to the site.
This situation can cause lawsuits against your business if your server, Wordpress backend, among other technologies under your management is at fault.
Clause 3: Court Attendance Costs
Another default clause where the insurance company will reimburse my costs to attend court or any arbitration in connection to a claim.
These three clauses are the major ones provided by the insurance provider. Clause 1 (Multimedia Liability and Advertising Injury) is the most critical one and every media liability insurance should include such a clause.
How Much Does Media Liability Insurance Cost?
I went shopping for media liability insurance rather blind in terms of cost. Most website investors, flippers, and creators are not actively shopping for this or blogging about it.
For the coverage that I received, the annual insurance premium was broken down as follows:
- Policy Premium: $3,500
- Company Fee: $250.00
- Broker Fee: $250.00
- State Surplus Lines Tax and Stamping Fee: $73.50
- Producer Fee: $250.00
- Total: $4,323.50
The terms are as follows:
- Liability coverage: $1,000,000
- Deductible: $5,000 per claim
- Territorial scope: worldwide coverage
- Retroactive date: from the start date of insurance
The premium is $3,500 per year with an additional $823.5 per year that includes broker fees and state taxes. There may be ways to reduce these fees if going direct to the insurance company (if they have a retail arm) but I chose to stay with my broker because of the following:
- Build a relationship with a broker that can answer questions, and assist down the line with new non-content businesses I launch
- Continuously shop my policy to find a better deal
Other Common Questions about Insurance
This is a selection of questions I asked my broker via email and on the phone.
What information is needed for the application?
This is the information that is needed for a speciality insurance product like this:
- Name, phone number, business address, email
- State where the business is registered
- The website used for the overarching business
- Subsidiary sites (i.e., provide URLs of your niche sites)
- Past and projected annual revenue
- Describe the nature of the business
Does this cover all websites I buy and sell within my business?
As a website flipper, I am constantly buying and then selling sites. My question was whether all these flips were covered even if I may not own the site for a long period of time.
The answer was yes. As long as the business is acquiring the assets and that can be proven, then that asset is covered.
Do I need to notify the insurance company of each asset I buy and sell?
According to the insurance provider, no. I do not need to notify of each acquisition or exit.
The insurance policy protects the main LLC of any lawsuits and does not care about each individual asset coming in and out.
Does this policy cover ADA compliance?
This has been a hot topic in the industry as some sites are being sued for not being ADA compliant. This insurance policy directly excludes ADA lawsuits. The policy has an exclusion clause, “Website Content Accessibility Exclusion Clause“, which states:
This is a rather new issue in the industry and I will hold off to make a decision on whether I need such coverage.
Can I get lower liability coverage?
The coverage provided was for $1M. However, coverage with $500,000 may be sufficient in reality.
I asked the broker this question and turns out the insurance provider does not provide coverage less than $1M.
Wrap up: Should You Get Insurance? It Depends
It depends is the best answer that anyone can give.
Not having insurance is risky but you have to weigh the risks vs costs vs peace of mind. If you are just getting started, there may be no need. Also, It may depend on where your business is located.
If you have a large portfolio publishing hundreds of articles per month and your business assets have value, you should think about getting some sort of insurance.
For about $350/month, I am happy to get insurance so that I have a “team of lawyers” that are always ready to defend me in case a lawsuit is presented against me.
That peace of mind is worth the money.
