Acquiring Publisher’s Insurance
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A writer several years ago had an idea for an unusual self-help manual-I will teach readers how to kill for hire, thought Rex Feral. A short time later, his book Hit Man was on bookstore shelves, and not long after that, James Perry read a copy in order to perfect his technique for a job he had-the murder of a man’s ex-wife and a son.When the victim’s relatives sued, the publisher of Feral’s book believed that the First Amendment, which has a long history of protecting freedom of speech, would be its shield. However, the Fourth US Circuit Court of Appeals disagreed and ruled that the freedom of speech, which authors have long relied upon, would not protect them from some cases, including those where the content of a book focused on criminal conduct.
This was the first of several subsequent cases where the content of a book has been the basis of a claim for damages unrelated to the traditional areas of libel and privacy. Since then, other books have faced claims for liability arising out of the use, or misuse, of information contained in them. Any publisher who puts out, for public perusal, a book containing instructions about a subject, no matter how innocuous, should have in place either a substantial pocketbook or a decent errors and omissions insurance policy. This would be to cover potential suits filed by creative lawyers who represent clients harmed by the misuse or abuse of information contained in those books.Several of the large insurance companies carry such policies. Insurance brokers serving this industry should be able to steer a publisher toward at least two companies that write such coverage across the nation and world, and possibly more.
Coverage & Cost Factors
Generally these policies cover libel, privacy invasion, copyright and some trademark risks, errors or omissions in the context of the book, and claims for damages arising out of the use of information contained in the book. Publishers should think of such policies as “malpractice” insurance. While they don’t protect against claims for intentional misconduct, they can cover the risk that a publisher has forgotten to acquire rights for copyright or trademark use, as well as the other areas mentioned above.
One significant benefit of such policies is that they generally cover the defense costs, including legal fees, involved in litigation, as well as any ultimate judgment against the publisher. Generally such policies have a deductible, which can range from $1,000 to $10,000 or more, depending on factors such as the size of the publisher, the distribution of the work, the kind of risk the work being published represents, and general market conditions. Often a publisher will choose a higher deductible to decrease the premium charged for the policy, or a publisher may want a lower deductible and agree to pay the higher premium to limit the publisher’s exposure in case of a claim.
Publishers often require an author to indemnify the publisher for claims arising from a book, and in those cases, the publisher may require the author to acquire their own coverage to guarantee that promise. In such cases, the author will be asked to add the publisher as an “additional insured” on the author’s policies. Other times, the publisher will require an author to cover a certain “first dollar” figure of any losses, and the author may choose to seek his or her own insurance policy to “buy down” that figure and limit the author’s potential losses. In a few rare cases, publishers have acquired the policy and added the author as an additional insured on the publisher’s policy. But the legal problem such an action creates is that the publisher often has no idea whether the book contains material which could generate a lawsuit and must depend on the author to have obtained the needed clearances or have written the material in such a manner so as not to generate a lawsuit.
What You Should Know
When evaluating such policies, a publisher should consider a number of factors, including the following:
1. Does the policy allow me to assist in the selection of counsel? Policies can range from allowing the publisher to select defense counsel to mandating that defense counsel will be appointed by the insurance company. Obviously a publisher wants to have input on who is selected to defend them in case of a threatened claim. And while the insurance company can offer valuable insight into a law firm’s expertise in this area and ways that publishers can control defense costs, a publisher will want to have a level of comfort that it can work with the law firm ultimately selected to handle the matter.
2. Am I allowed to have input in deciding whether to settle a case or not? Sometimes insurance companies have gotten at odds with their insureds over whether a settlement is appropriate in a certain situation. This is a good question to address with the insurance company before litigation arises.
3. To what extent are my authors covered? My employees? Independent contractors working with me on a publishing project if they are named in this suit? There are times when it may be to the benefit of a publisher to provide what is called a “courtesy defense” to such parties in order to present a united front against the plaintiff.
4. Is the policy an “occurrence” policy or a “claims-made” policy? These terms define two of the primary kinds of policies. The kind of policy you have has a major impact on the premium you will pay. “Occurrence” policies are those which cover all publications during a certain time period. If you publish a book on January 1, 2000, then under an occurrence policy, you would cover that period of time and the policy would cover any claim that arose in the future over that publication. However, if your policy is a “claims-made” policy, then you continue to purchase coverage year after year for that publication, and so long as a claim is made while your policy is in effect, you will have coverage. Obviously, there is a significant difference in price in the two policies, and that may have a significant impact on what kind of coverage a publisher purchases.
5. Does the policy cover punitive damages? The judgment for actual damages is just one part of the cost of a lawsuit. Defense costs can be a high dollar amount, and there may also be punitive damages, assessed to punish the publisher for publishing what was produced. Certainly the risk of being assessed punitive damages may be low in the greater scheme of things, but it is a risk that requires coverage.
Where to Go for Advice
The insurance broker you are working with should be able to guide you through the process of selecting the policy that fits your needs best. Certainly your lawyer can give you valuable insight as you work through this process, also, and I would encourage you to include that person in these discussions.
Editor’s Note: IBPA offers Publisher’s Liability Insurance through Granite Insurance Brokers. For more information, contact Mike Mansel at firstname.lastname@example.org or (888) 347-2648, or visit Granite Insurance Brokers on the Web at www.publiability.com.
Jean Maneke is an attorney with Lamfers & Maneke.
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