If the celebrity endorsing your product falls from grace - guess what, there’s insurance for that.
What is the collateral damage when a celebrity suddenly falls on hard times and takes the products they’ve endorsed with them?
That is the question AIG has decided to answer in the form of its new insurance product designed to help customers facing financial losses from a celebrity endorser’s scandal, public fall from grace or unexpected death.
Celebrity Product Recall Response covers certain costs incurred by companies to recall product(s) bearing a celebrity endorser’s name and image, be it on footwear, cereal boxes or pots and pans.
When cycling legend Lance Armstrong found himself at the centre of a steroids scandal, his sponsors and corporate backers, including Nike, RadioShack and bicycle manufacturer Trek, were forced to cut ties with him or face public backlash.
Equally hard to recover can be the blow to the bottom line.
AIG, which is providing it through its Lexington Insurance Company, said it developed the product to address exposures companies take on when they associate with well-known individuals to promote their brands.
Lexington Insurance Company president and CEO, Jeremy Johnson, said: “In this age of social media and instant news, reports of indiscretions by celebrities or high profile athletes can spread worldwide instantly, with swift, adverse implications for products or brands associated with the individual.”
The insurance is triggered by significant news media coverage of an endorser’s actual or alleged criminal act or other distasteful conduct that results in (or is likely to result in) public contempt for the individual and a significant adverse impact on a company’s product.
Coverage includes costs associated with removing products and packaging from the marketplace, including their transportation, disposal or destruction.
It also reimburses companies for the removal of marketing and advertising materials bearing the celebrity’s image.
The coverage is available with standalone policy limits up to $5million, or by endorsements with limits up to $1million, and can protect companies ranging in size from start-ups to mid-sized.
