How important is insurance for marketing agencies?
There are many disciplines to marketing and each comes with its own risks. You need to protect your business against threats to your reputation and bank balance if they come under attack from accusations brought on by unhappy clients.
Clients get in touch with you because they’re looking to use your expertise to increase sales, brand awareness, conversions and promote other aspects of their business. Since you’re taking their money, they will expect results from you.
These expectations, especially in marketing where nothing can be guaranteed, can be difficult to manage and as a result disputes with clients are not uncommon. Following a seemingly unsuccessful campaign clients demand explanations and with that may come requests for more work to be done for free, refunds of money paid, and sometimes even claiming compensation if the campaign had the opposite effect on the success of their business.
Even when you’re doing your best and working hard, sometimes things don’t turn out as planned. No one can predict what the market will do, nor can you control your client’s actions. It’s important that you protect your business with solid legal insurance covers because it can be very costly in time and money to manage a conflict with an unhappy client.
Key insurance for marketing consultants and companies
Every marketing consultant and company should consider several legal covers to protect their business. Some are required by law while others are just good common sense when it comes to protecting your business.
Professional indemnity insurance for marketing consultants and agencies
The first and possibly most important cover designed to defend your business against dissatisfied clients demanding financial compensation in remedy of professional negligence or error. A good professional indemnity cover should be underpinned by relevant wording, A+ rated insurer with a reputation for paying claims but also a legal process that works when you’re in need of help.
When deciding on a limit, you’ll need to consider a number of factors such as the value of your client contracts, the possible financial impact if the marketing campaign had the opposite effect and any contractual requirements.
Business legal expenses
A useful legal cover add-on to take care of tax and commercial disputes not usually covered by PI insurance. It’s designed to provide you with professional assistance and defence if you’re facing a business issue such as a contract dispute. Quite common in the marketing industry where clients always expect more or might say you went beyond the brief.
Situations like these tend to result in underpayments or breach of contract. Unpaid invoices is another rising issue. With good practices you can reduce the risk but chargebacks still happen even on bank transfers. And there is HMRC saying you haven’t paid the right amount of tax. Having a legal backup in the form of legal expenses cover can come very handy.
When to buy public and employers liability for a marketing agency
Not every marketing agency will need those insurance covers so consider your circumstance first before buying. You don’t want to be spending unnecessarily.
Public liability insurance
A crucial cover to defend you and your business against unfortunate accidents is public liability. If you have any kind of face to face contact with your clients and the public during the course of your business, there are always risks of an injury or property damage. Something as small as spilling your flat white over a client’s laptop can set you back a few thousand pounds.
Employers liability insurance
This is a must have by law if you have anyone working for you in any kind of capacity - full time and part time staff, contractors or even volunteers. However, if you’re a family run business - husband and wife - without any other staff you don’t need to buy this cover.
The size of your contracts is also a factor. While you might be limiting your liability in client contracts, you are not immune to claims exceeding this amount. Ensure that the PI limit you select is sufficient for the size of your business.
