Consultants Are Not Adequately Protected Against Technology Risks: Why Media Liability Coverage Isn’t Enough for Modern Marketing Firms

Consultants Are Not Adequately Protected Against Technology Risks: Why Media Liability Coverage Isn’t Enough for Modern Marketing Firms

 

DigitalWave, a creative marketing company, recently landed a high-profile client. Their job was to boost the client’s online presence through website design, social media management, and digital advertising.

Everything was going smoothly until a cyberattack compromised the client’s website, causing a significant data breach. The client held DigitalWave accountable and sued for negligence in website security. Unfortunately, DigitalWave’s existing media liability insurance didn’t cover the breach costs, leaving them in financial trouble.

The Growing Need for Comprehensive Coverage

As marketing firms and other consultants broaden their digital services, they face emerging risks that traditional insurance policies never contemplated covering.

Professionals like direct marketing companies, consultants, freelancers, and other service providers, who integrate technology into their work are exposed to similar vulnerabilities. To protect their businesses, they require a robust insurance package that includes Technology Errors & Omissions (E&O), Miscellaneous E&O, and Media Liability.

The Evolving Role of Marketing and Tech Professionals

Marketing firms have evolved beyond the catchy slogans and eye-catching ads from the Mad Men era. Today, they play a critical role in:

• Website Creation & Management: Ensuring websites are secure and functional.
• Social Media Oversight: Managing online interactions and brand reputation.
• App Development & Tech Solutions: Delivering software for digital marketing campaigns and marketing infrastructure.

 

As marketing firms dive deeper into digital spaces, they face new risks such as data breaches and cyberattacks, making robust security measures essential.

Real-World Case Studies

Exactis Data Breach (2018):

• A marketing firm, Exactis, exposed personal data of nearly 340 million people due to a poorly configured database.
• The breach led to lawsuits over insufficient security measures, demonstrating the critical need for Technology E&O insurance.

Rauxa Email Breach (2019):

• Rauxa faced legal action after a vulnerability in their email system exposed sensitive client data.
• This incident highlights the importance of strong security protocols and comprehensive insurance coverage.

Why Traditional Media Liability Insurance Isn’t Enough

Media liability insurance covers issues like defamation and some copyright infringement, but it’s not enough to protect against digital threats. For instance, if a marketing firm’s managed website is hacked, media liability insurance won’t cover the resulting damages.

Comprehensive Insurance Solutions

To effectively manage these risks, marketing companies and other tech professionals should explore more extensive insurance policies that include:

• Errors & Omissions Coverage: Protects against claims of negligence or poor performance, including intellectual property disputes.
• Cyber and Privacy Liability: Covers costs related to data breaches, such as legal fees, notification costs, and regulatory fines.
• COMBO policies: Includes both above as well as other coverages that are unique to marketing companies. By combining, you often save on total costs.
• Intellectual Property – With AI and large language models increasingly used in marketing, the risk of unintentionally violating intellectual property rights is higher. Conversely, other companies could infringe on your intellectual property, intentionally or not.

 

As marketing firms expand their digital services, securing comprehensive insurance coverage is essential. By integrating Technology E&O, Miscellaneous E&O, and Media Liability into their policies, companies and professionals can protect themselves against a wide array of digital risks.

Leading providers like Scottsdale, Chubb, and Coalition offer innovative policies that empower businesses and individuals to navigate the digital landscape with confidence.

If you’ve read this far, congratulations! You’re on your way to mastering cyber insurance. Be sure to subscribe to get more exciting cybersecurity and cyber insurance content.

For more insights,  check out the 14 Steps to Protect your Business’ Data.

Feel free to message me here on Linkedin or email me at [email protected] if you have questions about cyber insurance or cybersecurity.

What kind of digital marketing does your company use to find new clients? Let me know in the comments below!