Business insurance for advertising and communications agencies

For an advertising or communications agency, the biggest risk is that a mistake in a campaign costs the client money, or that the material uses someone else's image, text or trademark without the right to do so. The cover for the client's loss is professional indemnity insurance. Infringing someone else's rights is often excluded, and needs checking separately in the policy terms.

An agency's biggest risk

An agency works with the client's brand and money, and most of what it does is public. A mistake is visible straight away and can spread before anyone has time to correct it.

Typical claims from clients concern:

• the wrong price, date or terms in an ad that the client has to honour,
• a print run that has to be redone,
• an ad budget spent on the wrong audience or the wrong period,
• a campaign that breaks the Swedish Marketing Act, so the client is sanctioned,
• an image, a typeface or a music clip where the licence did not cover the use.

Example: The image that wasn't licensed. An agency makes an ad campaign for a chain of cafés and uses an image from a stock library. The licence only covers editorial use, not advertising. The photographer spots the campaign and claims compensation from the chain for unauthorised use. The chain turns to the agency. If the agency's insurance covers copyright infringement, the insurer investigates the claim and negotiates with the photographer. If it doesn't, the agency pays the claim itself.

What most agencies need

Professional indemnity

Pays the client's financial loss when it is caused by a mistake in the agency's advice or work. Check whether the terms also cover infringement of copyright, trademarks and other intellectual property. It is often excluded or a separate add-on. There is more on this cover on the page about professional indemnity insurance.

Cyber

Agencies often hold the logins to clients' social media accounts, ad platforms and websites. If one of those accounts is hijacked, the incident is the agency's. Cyber insurance gives help during the attack and pays the costs of recovery.

Property and general liability

Cameras, lights and computers on shoots, and damage to premises and property at clients' offices or on location. This is usually included in business insurance, but equipment outside the office sometimes has to be listed separately. General liability is part of liability insurance.

What clients and contracts require

Larger clients often write into the contract that the agency guarantees the material does not infringe anyone else's rights, and that the agency will compensate the client if it does. A commitment like that can go further than what the agency would be liable for under the law, and then the insurance does not always cover it. Read the contract and the policy terms side by side.

Public procurements of communications services also often require the agency to show a certificate of insurance with a set limit.

How much does it cost?

The premium for professional indemnity mainly depends on turnover, which services the agency provides, whether intellectual property infringement is included and the limit chosen. For more on pricing, see how much business insurance costs.

SNI codes

SNI is the Swedish industry classification. This page covers companies with these codes:

• 73111 Advertising agency activities
• 73119 Other advertising activities
• 70210 Public relations and communication activities
• 74102 Graphic design activities

Frequently asked questions

Are we covered if we accidentally use an image we don't have the rights to?

Only if the policy terms cover copyright infringement. Many professional indemnity policies exclude it, and then you need an add-on. Ask about it specifically.

Who is responsible if a campaign breaks the Marketing Act?

First and foremost the client who is advertising. An agency that contributed substantially to the campaign can also be banned from repeating it. The client can also claim compensation from the agency if the fault lay in the agency's advice or work.

Does cyber insurance cover the clients' accounts?

It depends on the policy terms. The cover applies mainly to the agency's own systems. A breach through the agency's logins can be covered, but damage on the client's side is often handled as a claim against the agency.