Political consultants and organizations involved in campaigns and voting face increasing liability risks as elections become more contested in an increasingly polarized political landscape.
The more litigious environment has been spurred in part by the rise of political advocacy organizations and the spread of false information on social media, experts say.
Campaigns or committees proliferate, with organizations that appear to exist for a wide range of political sectors and topics, said Lisa Rodriguez, Seattle-based senior vice president, executive liability broker, at Brown & Riding Insurance Services Inc.
“There are so many things going on right now in the world. There are advocacy groups for almost everything,”; Rodriguez said.
Underwriters tend to treat political organizations as higher risk than other nonprofits like a Rotary Club or foundation because the losses and payouts can be higher because of the sensitive nature of the risk, she said. “It’s always been a tougher class,” she said.
The market has evolved, said Holden McKinney, Fort Washington, Pennsylvania-based assistant vice president, professional lines, at Amwins Group Inc.
“I remember the first political action committees I worked with were placed in a nonprofit D&O market for $2,500. Those days are long gone,” McKinney said.
Typically, premiums even for local political action committees are well over $25,000 for a $1 million limit, he said.
Election misinformation can threaten the electoral process and make it more difficult for people to exercise their right to vote, which can create legal and reputational risks for political consultants, said Joshua Tucker, New York-based senior counsel and fellow at the Kroll Institute. a think tank. Tucker is also a professor of politics and co-director of the Center for Social Media and Politics at New York University.
“There is a legal risk if your campaign activity crosses the line into illegal attempts to suppress people’s right to vote,” Tucker said.
Consultants face a difficult trade-off because, on the one hand, they are paid to help their candidates win, but on the other hand, polls show that a large percentage of Americans support democracy and election integrity, he said.
“There is a danger in being associated with candidates who themselves are associated with casting aspersions on how democracy works in the United States,” he said.
Election-related defamation suits are growing even though it is much more difficult for public figures to prove that a statement about them is defamatory, said Caleb P. Burns, a law partner at Wiley Rein LLP in Washington.
Litigation involving alleged defamation of public figures has largely been unsuccessful until recent years because the threshold for a claim is higher and there must be some opportunity for public discussion, he said.
“The judicial nature of former President Donald Trump as well as a number of other political figures has something to do with this. Courts have become more sympathetic to these claims, and the environment has become more friendly to these types of lawsuits,” Mr. Burns said.
Last year, Trump filed a $475 million defamation lawsuit against CNN.
Political campaigns and committees should consider a range of coverages such as directors’ and officers’ liability, employment practices liability, errors and omissions, cyber and crime insurance, sources said.
Media liability and risk of personal injury in general are important considerations for political organizations, McKinney said.
“Politicians and political action committees obviously say a lot of things, run a lot of ads, make a lot of statements. And then the political research organizations also put out studies and data to support what they’re advocating,” he said.
Cyber risks are also increasing. Cyber attacks on the Democratic National Committee in 2015 and 2016 led to a crime that cybersecurity experts and the US government later traced to Russia.
“Anyone running a high-profile campaign is going to be a target. You have donor information that can be shared with you,” including a large amount of personally identifiable information that could present an opportunity for a bad actor, Mr. McKinney said.
Professional liability risks can arise if the service or advice provided to others results in a financial loss to the organization or client, Rodriguez said.
Many political organizations also raise money for a particular campaign or cause, and if there is a problem with how those finances are managed, it could lead to a D&O claim for alleged mismanagement of those funds or failure to follow the entity’s bylaws or mission, she said .
A donor may assume their donation will be directed toward a certain cause, but if the donation is directed toward something else, they can sue for malpractice, she said.
For businesses that handle money, crime insurance provides coverage for losses due to embezzlement and fraud, she said.