Picture the moment: your agency wins a six-figure, multi-year contract with a blue-chip brand. All your hard work is validated in one deal, doors fling open to new opportunities, and your reputation is cemented in the market.

Now imagine it turning upside down, all because of a supplier’s oversight that would see you bearing the consequences for something that wasn’t your fault…

A nightmarish scenario, but the reality for one of our agency clients – who relied on our specialist broker expertise to escape financial loss and protect their relationship with their biggest client. 

The setup: a smooth start

As part of their agreement with the blue-chip client, the agency engaged a reputable video production company to create a suite of advertising assets. 

Contracts were signed, creative delivered on time, and invoices paid as agreed – everything went smoothly. The campaign performed exactly as expected and their client was delighted!

The contract ensured the agency had two-year licences for the creative, allowing their client to continue using the campaign materials across multiple cycles. Everything appeared to be in perfect order.

The unexpected twist

Months later, the agency’s client received an unexpected call from the talent company whose performers featured in the ads. And here’s where things started to get messy.

The licence fees for the talent’s continued use, as stated in the contract, hadn’t been paid. Without payment the agency’s client couldn’t legally use the creative content – a huge problem for the client but a bigger one for the agency, who were now suddenly and inadvertently in breach of contract. 

Not only that. When the agency tried to contact the production company, they discovered it had gone into liquidation… 

The underlying issue

It made sense that the unpaid licence fees were a consequence of the insolvency, but deeper investigation by our team revealed that the production company had been trading actively at the time the payments were due. During that same time period, their social channels were alive with recent projects and campaign launches, suggesting everything was business as usual!

We discovered the company didn’t go into liquidation until several months after the licence fees should have been paid, meaning that the non-payments were down to something else. The production company had simply failed to discharge its contractual duties with reasonable care and diligence via an administrative oversight…

A costly dilemma

Despite having done everything right, the agency was stuck between a rock and a hard place, and faced a potentially costly situation.

Their client rightfully expected a quick resolution. After all, they had paid for the licence rights in good faith. The agency, however, could either contest liability (potentially damaging their relationship with a blue-chip client) or pay the licence fees out of their own pocket to reinstate the campaign. Either way, they stood to lose financially…

So, they turned to their Professional Indemnity insurer. They hoped to trigger the “mitigation of loss” clause – a safety net designed exactly for these kinds of scenarios – but it didn’t go to plan.

The rejection

The insurer initially rejected the claim on the basis of a standard exclusion within the policy relating to supplier insolvency. In their view, because the production company had gone into liquidation, the loss stemmed from that and was therefore excluded.

It was the kind of decision that a policyholder who didn’t have a specialist broker in their corner might have accepted. And that’s where RiskBox makes all the difference.

The challenge

Naturally, we didn’t accept the insurer’s decision. Working closely with the agency, we gathered every piece of documentation – from the contract and correspondence to a detailed project timeline with records of the production company’s payments and liquidation date.

By carefully piecing together the timeline, we were able to demonstrate beyond doubt that:

• The agency had paid the production company in full, long before any signs of financial distress
• The licence fees should have been paid to the talent company months before the production company entered liquidation
• The non-payment was therefore due to administrative error, not insolvency

With both a technical understanding of the policy and the proof we had gathered to back up our argument, we were confident in demonstrating that the exclusion shouldn’t apply.

The outcome

Faced with clear evidence, the insurer was forced to overturn its decision and agreed to pay the outstanding licence fees directly to the talent company. This allowed the client to continue leveraging the campaign without interruption, while protecting the agency’s relationship with one of its most valuable clients.

The takeaway

This case highlights two important lessons for agencies. Take note:

• Even when you’ve done everything right, third-party mistakes can create unexpected liabilities – Whether it’s a missed payment, a licensing error, or a supplier oversight, these issues can quickly escalate, particularly when large brands and complex contracts are involved.

• The value of having a specialist broker can’t be overstated – A direct insurance buyer might have accepted the insurer’s initial rejection. Our expertise meant we could challenge it effectively, build a compelling case, and ensure the agency received the protection they’d paid for.

Protect your success with a specialist broker

Insurance isn’t just about having a policy in place. It’s about having the right people in your corner when things go wrong.

At RiskBox, we don’t just place the right-fit cover for our clients – we stand by them when it really matters, fighting on their behalf with the specialist expertise to achieve a just outcome. To ensure your agency’s successes are protected through and through, get in touch with our friendly team today for a conversation about your unique needs. 

Photo by charlesdeluvio on Unsplash