What Every Publisher Should Know About Publisher's
Liability Insurance
By Attorneys Lloyd J. Jassin and Steven C. Schechter
Adapted from The Copyright Permission and Libel Handbook: A Step-by-Step
Guide for Writers, Editors and Publishers by Lloyd J. Jassin and Steven
C. Schecter (John Wiley & Sons)
Publishing is a risky business. Ask Lyle Stuart, publisher
of Barricade Books, whose company faces an uncertain future 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), as this is being written,
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.
Bear in mind, organizations such as the Publishers Marketing Association
(PMA) (http://www.pma-online.org)
and the Small Press Center (www.smallpress.org), offer their members significant
discounts on media perils policies. Similarly, the National Writers Union
(NWU) (www.nwu.org/nwu), offers its
writer members an affordable media perils insurance policy, protecting
against charges of libel, invasion of privacy, copyright infringements,
and other legal threats.
INSURANCE CHECKLIST
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?
|
NOTICE: This article represents copyrighted material and may only
be reproduced in whole for personal or classroom use. It may not be edited,
altered, or otherwise modified, except with the express permission of
the author. This article discusses general legal issues of interest and
is not designed to give any specific legal advice pertaining to any specific
circumstances. It is important that professional legal advice be obtained
before acting upon any of the information contained in this article.
LLOYD J. JASSIN is a New York-based publishing and entertainment
attorney in private practice. He is coauthor of the bestselling Copyright
Permission and Libel Handbook: A Step- by-Step Guide for Writers, Editors
and Publishers (John Wiley & Sons, Inc.), available at bookstores
or at www.copylaw.com. Mr. Jassin has written extensively on negotiating
contracts in the publishing and entertainment industries, and lectures
frequently on contract and copyright issues affecting creators. He is
counsel to the Publishers Marketing Association and Vice Chair of the
Small Press Center. He may reached at Jassin@copylaw.com or at (212) 354-4442.
His offices are located at 1560 Broadway, Suite 400, New York, NY 10036.
STEVEN C. SCHECHTER is a media and entertainment law attorney,
based in Fair Lawn, NJ, and co-author of The Copyright Permission and
Libel Handbook (John Wiley & Sons). He may be reached at medialawre@aol.com
or (201) 974-6660. His offices are at 0-100 27th street, Fair Lawn, NJ
07410 |
