Advertising Agency Business Insurance
Getting business insurance for your advertising agency is essential.
Advertising agencies need to be protected against claims involving things like false advertising, misleading statements, and breach of contract.
For example, a client may suffer financial consequences due to your advertising advice, or a client’s competitor may claim that your latest campaign made libelous statements against them.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for an Advertising Agency
General liability insurance is — generally speaking — one of the most important insurance policies for advertising agencies.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
General liability insurance is an invaluable asset in your arsenal, however, there are several supplementary options you should consider in order to be fully protected:
- Professional liability insurance: Protects your business in negligence in its work that has resulted in financial loss for a client.
- Business interruption insurance: If normal business operations are suspended by a covered event, this policy will cover the expenses and lost income.
- Commercial umbrella insurance: This policy provides extra liability coverage to protect you from claims that surpass the limits of your core policies (e.g., general liability).
When purchasing business insurance the two general options available to you are:
- Traditional providers: Conventional insurers with a brick-and-mortar establishment are historically the more popular option due to their longevity and reliability.
- Online providers: A more recent alternative to the traditional option that has grown due to the quality, speed, and accuracy of its insurance.
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Cost of General Liability Insurance
On average, ad agencies in America spend between $450 - $750 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for an advertising agency to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for an Advertising Agency
Example 1: A potential client is meeting you at your office to discuss an ad campaign. While he is walking up the steps to the entrance, he slips and falls, breaking his wrist. He asks that you pay for his medical treatment, claiming that your steps are unsafe. Your general liability insurance policy would likely cover this expense.
Example 2: One of your competitors has sent you a letter claiming that your ad agency has libeled their business. You are fairly certain that the case has no merit, but you also realize that you need to hire an attorney regardless to protect your business. Your general liability insurance policy will cover the cost of hiring an attorney and pay for a settlement if one is necessary.
Example 3: An employee at your ad agency is late for work. She comes rushing into the office and fails to see a client. She knocks the client to the ground, and he breaks his arm. He decides to sue your business for damages. The general liability insurance policy you carry will pay for your legal defense costs as well as the cost of a settlement if needed.
Other Types of Coverage Advertising Agencies Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Workers’ Compensation Insurance
Workers’ compensation insurance provides financial protection for employees if they are injured performing work duties. If an employee is hurt, they can get medical treatment through workers’ comp. They can also get help with lost wages if they have to take time off of work to recover. Workers’ comp is required in most states for employers.
Professional Liability Insurance
A professional liability insurance policy will help to protect your business against claims of negligence due to errors or failure to perform. If a client sues your business over mistakes you made, or mistakes they claim you made, your policy will pay for your legal defense fees. It will also pay for the cost of a settlement if one is required to resolve the lawsuit.
Commercial Umbrella Insurance
The general liability insurance policy you carry will be sufficient to protect your business in many situations, but it is possible for the limits of your policy to be exceeded—like if you lose a major lawsuit. If your general liability insurance runs out, you are left to pay the remaining damages out of pocket. However, if you have a commercial umbrella policy, it will cover excess damages when your general liability policy’s limits are exceeded.
Commercial Property Insurance
All of the equipment and supplies you have invested in to run your business would be costly to replace if it were damaged or destroyed, such as if a fire broke out and destroyed your office. A commercial property insurance policy provides financial protection against such situations if your property is damaged by a covered event.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your advertising agency:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Advertising Agency Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
It is important to acquire comprehensive advertising agency business insurance prior to the commencement of the business’s operations considering this industry’s inherent risks.
Note that in some cases, in order to be considered as operating legitimately by the state, your business is mandated by law to carry certain types of business insurance.
Not necessarily. Certain exceptions may be written directly into your advertising agency insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.