Crisis Comms: Damn Insurance Companies

If you’ve ever read the fine print in your company’s insurance policy, you might come across the same language I recently discovered in mine:

What You Must Do In The Event of a Claim or Loss

Should a senior officer become aware of any claim, loss or damage the following obligations must be complied with by you:

You must not admit liability for or settle or make or promise any payment in respect of any claim, loss or damage which may be covered under this Policy.


Insurance companies may as well change that language to say what they really mean:

“We don’t give a damn if your reputation goes up in flames. If you do the human thing, admit your error and apologize, we’ll void your contract and leave you to pay the damages yourself. Do not, under any circumstances, act with the humanity the public demands in a crisis.”


Let’s be clear. Insurance companies care primarily about two things: reducing payouts and increasing profits.

On the other hand, crisis communications professionals care about your company’s long-term reputation, your personal reputation, employee morale, your ability to attract and retain employees, your professional relationships with vendors and lenders, and the long-term financial consequences of the crisis.

So what are you supposed to do when you know you should apologize and move on, but can’t out of fear that your insurance contracts will be voided? Here are three ideas:

1. Find an Insurance Company That “Gets It”

Jonathan Bernstein, President of Bernstein Crisis Management, says there are some far-sighted companies out there: “AIG (surprisingly) is one of the more progressive insurance companies in this regard.”

Bernstein adds, “In my experience, more and more insurance companies are aware that settlements tend to be lower, even when an organization is factually liable, if the court of public opinion is engaged in accordance with crisis management best practices.”

2. Find a Carrier That Offers a Crisis Management Policy

According to Bob Sobel, Vice President of Sales for Oxford Insurance, “There are some errors and omissions insurance contracts that have a crisis management component. The insurance companies would normally send you to one of their own pre-approved crisis management vendors.”

Still, analyze the language in your policy carefully. Although some plans may allow you to use a crisis management firm to help you notify customers of a breach of credit card information, for example, they may not allow you to admit responsibility for other types of crises.

3. Go It Alone

If the potential payout is relatively low but the risk of inaction is high, you might consider going it alone. Read your policy to see whether this would void the contract altogether, or whether the insurance company would void it only for that one event. This decision is risky, so consult a professional before making your final choice.

I’d love to hear from insurance experts, attorneys, and other crisis communications pros on this one. What advice can you add to what I’ve already offered? Please leave your thoughts in the comments section below.

Related: Seven Rules to Remember When a Crisis Strikes

Related: Does Denying False Rumors Cause More Harm Than Good?