Crisis Communications and Image Restoration - There's Insurance for That?

AuthorSibley, Russell A., Jr.

Imagine the following scenario. You represent a small to medium-sized business or organization as their primary counsel. Your client calls you with an urgent matter that truly qualifies as a crisis such as 1) a retail client has a significant data breach: 2) a non-profit organization has an employee charged with assault on a minor; 3) a driver for a well-known local company is involved in a deadly DUI in a work truck; or 4) a real estate client holding company has a serious fire with injuries and even death in one of its apartment buildings.

Beyond their immediate impact on the injured, these and many other incidents can cause significant harm to your client's business or organization. If not addressed immediately with accurate, timely, and appropriate messaging, episodes like these can escalate into catastrophes causing long-term damage to the client's reputation in the community or their market. As counsel we assist navigating them through the legal ramifications of these events, but, a great value added proposition would be to advise them on potential relief from their insurance policies as well.

Insurance Coverage

A source of significant help may be located within your client's already existing insurance policies, including their commercial general liability (CGL) policy, their separate cyber/data breach policy if not included in their CGL policy, and possibly other policies they may have such as property coverage depending on the nature of the incident. This coverage may reduce or eliminate the potential for lingering harm to the client. (1)

Some CGL polices provide additional coverage known variously as "crisis management enhancement endorsement," "emergency response expenses endorsement," or "public relations endorsement" to address an immediate crisis. Some policies also offer longer-term "image restoration and counseling" coverage to help restore "the named insured's reputation and consumer confidence through image consulting." Each is discussed below.

Crisis Management/Emergency Response/Public Relations Enhancements

For crisis communications, a representative CGL policy may provide the carrier "will reimburse you for 'crisis management emergency response expenses' incurred because of an 'incident' giving rise to a 'crisis' to which this insurance applies. The amount of such reimbursement is limited as described in [the policy]." Further language states "'crisis management emergency response expenses' mean those expenses incurred...

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