Disgrace Insurance: Protection if Your Product’s Endorser Has a Scandal
Insurance for celebrity endorsements gone wrong
By Benjy Schirm, J.D. | Reviewed by Canaan Suitt, J.D. | Last updated on December 26, 2023Use these links to jump to different sections:
- What Is Disgrace Insurance Coverage?
- What Does Disgrace Insurance Actually Cover?
- Find an Experienced Insurance Coverage Lawyer
Companies frequently use celebrity endorsement deals in marketing strategies to influence consumers and build brand image and trustworthiness. But what happens when an endorser like Lance Armstrong becomes the pariah of a doping scandal, or Tiger Woods has a very public falling-out with his wife? What is a company to do with the millions of dollars of advertising research, marketing management, and consumer behavior? The answer is disgrace coverage.
What Is Disgrace Insurance Coverage?
That’s right: A form of insurance coverage that is often paired with disability insurance is now being offered to companies as disgrace coverage.
It includes protection from unlawful acts and offensive statements by a contracted spokesperson whose image has been licensed on consumer items, as well as insurance for a commercial campaign that fails due to a disgraceful act. Essentially, the coverage protects your business in case a celebrity spokesperson behaves in a disgraceful manner.
It further entitles companies to:
- Reimbursement for money paid to secure the disgraced celebrity’s endorsement;
- Hire a substitute spokesperson;
- Reshoot or reproduce the advertising material; and
- Remove the spokesperson’s image from the product packaging.
For the most part, the consumer purchase premiums are less than one percent of the coverage; for example, a $1 million policy will generally run you between $5,000 and $10,000. This cost may increase for a riskier celebrity.
What Does Disgrace Insurance Actually Cover?
Of course, disgracing a brand is a subjective term. Some policies exclude actions that are consistent with the celebrity’s behavior. For example, if Rosanne Barr were to say something provocative that aligned with her public persona, the policy may not pay out. However, if a tweet of hers ends up getting her series reboot canceled, it may be more likely that the policy would pay out.
Insurance companies have additionally noted that, for policyholders, there is a time limitation. Though ad campaigns and a celebrity’s fame can last decades, disgrace coverage policies only cover the period of time during which the spokesperson is under a contract. So, while you are taking a risk with a celebrity endorsement, for every Subway’s Jared there are many more like Flo from Progressive.
Find an Experienced Insurance Coverage Lawyer
As a business owner, you want to be certain that you are protected and properly insured when you attach your brand name to celebrities. Be certain to find an experienced insurance coverage attorney to help ensure the future is bright, no matter what your celebrity spokesperson may do on—or off—social media platforms.
For more information on this area, see our insurance coverage law overview.
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