Insurance Policies for Crisis Communications, Part I

As the year ends, businesses and other organizations that confront volatile issues may want to look to their insurance policies for extended coverage. More and more, insurance companies are offering “public relations” riders to help limit the financial damage that can come from a “reputation” disaster. Insurance companies are not only offering this coverage, but some are going further by selecting trusted and experienced crisis communications firms that, if brought in immediately to provide sensible counsel, could actually limit the potential exposure and damage of a crisis on an organization.

A tragic accident in a rental housing development left the owner/developer and property manager exposed to charges of health and safety violations from some of its tenants. Though those allegations were found ultimately to be untrue, the situation (evolved) began to blossom into what could be viewed as unreasonable and unwarranted demands for accommodations, rent relief, lease abrogation and satisfaction of unrelated, pre-accident grievances. Almost all of these demands were leveraged with the threat and activity to publicize what amounted to rumor and speculation. Further damage from the original accident would then have the potential to arise in the form of a plummeting reputation in the community for that complex and all other developments of the same owner, then mass exodus of tenants, diminished traffic from new potential tenants and political fallout in surrounding communities where the owner wanted to build. As a result of our strategic counsel, the developer and property manager were lauded at the next meeting of the Town Council. At the heart of the matter, of course, our client was committed to doing the right thing.

The owner had an insurance policy rider for just this kind of situation and understood its need for an external communications resource. The company called on my agency, Fineman PR, to help them communicate the facts. We worked with local town officials, law enforcement and fire district officials to communicate the truth of what happened and began an intense program of tenant relations, media relations, community relations and Web communications to help these critical audiences understand that the developer and property manager were intent on going the last mile to help residents. We also worked closely with our client’s law firm to assure our work in the court of public opinion did not create added exposure in the court of law.

As companies look to 2010, my advice would be to take a close look at their insurance policies and understand what the provisions are for crisis communications. Bad news can go global within seconds and when you’re trying to weather a crisis, planning makes all the difference.