Reputation Insurance: What it is and how it works

Reputation Insurance

One of the greatest risks to a well-established or growing brand is reputational damage. How many times have you seen a negative news item about a well-known company go viral, leading to protests and product boycotts? In the age of social media, bad publicity surrounding a controversial statement made by a company executive, a product defect, or a cyber attack that compromises customer data can spread to millions of people within minutes, causing severe damage to a brand’s reputation. When this happens, an immediate, coordinated response is required to mitigate further damage to the brand. Reputation insurance can help finance such a response and cover other losses associated with a reputation-damaging event. 

Types of Policies

Reputation insurance is available as a standalone policy, but it is most often procured as part of other types of insurance policies, including cybersecurity, crisis management and business owner’s liability insurance. Standalone reputation insurance policies tend to be very expensive and are therefore primarily purchased by large companies. 

Cybersecurity Insurance

Cybersecurity insurance policies provide protection against losses stemming from cyber incidents, such as data destruction or theft, hacking events, and extortion demands. Cyber incidents often lead to reputational harm, lowering a company’s value and impairing the firm’s ability to attract or maintain customers. To help mitigate the damage, cybersecurity policies typically cover the costs of hiring a public relations consultant with expertise in crisis communications. These experts prepare and disseminate information to customers and the media and/or set up call centers to help restore confidence in the company’s computer systems and their ability to keep consumer data safe going forward. 

Crisis Management Insurance

Crisis management insurance policies cover costs associated with restoring a brand’s reputation following a variety of negative events. The policy may narrowly define the types of events it covers and may be tailored to a particular industry. Covered events can range from food contamination and product recalls to workplace accidents and, increasingly, cyber breaches. The policies typically cover costs associated with hiring public relations consultants and mounting a quick response to mitigate any future damage arising from an incident. 

Business Owner’s Liability Insurance

Basic business liability insurance policies protect companies against a wide range of claims and lawsuits from third parties. These typically include claims that the insured caused reputational harm to others, including libel and slander lawsuits, as well as advertising injury, which may occur if the insured unwittingly used false or offensive information in its marketing materials. 

Standalone Reputation Insurance

In addition to providing financial support for crisis management expertise and efforts to restore the brand’s image, standalone reputation insurance policies cover lost profits resulting from the harmful event. If sales growth was forecasted but is now lost due to the incident, this insurance is designed to cover that loss. The insurance company will verify the validity of the sales forecast after analyzing the company’s performance to date, and other factors. 

Exclusions in Reputation Insurance

Reputational damage can result from companies lowering the quality of their products to cut costs. This type of event is excluded from reputation insurance policies, which also exclude fraud and other intentional acts. Examine your policy closely for details on other exclusions as well as the types of events that are explicitly covered. 


As with other types of policies, insurance companies often challenge or deny claims involving reputation damage in order to limit their liability. Disputes may arise over the value of the losses, for example, or whether a particular event triggers benefits. 

If your business is involved in a dispute with your insurance company over reputation insurance, do not hesitate to call us for assistance. We have the experience, expertise and tenacity to make sure insurance companies keep the promises they made to you and your business. 

Contact us today for a free consultation.



Evan S. Schwartz
Founder of Schwartz, Conroy & Hack