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Did your celebrity endorser fall from grace? There's insurance for that

Posted On: Jan. 29, 2015 12:00 AM CST

Did your celebrity endorser fall from grace? There's insurance for that

An American International Group Inc. unit is offering limits of up to $5 million through a product designed to help policyholders respond to risks from a celebrity endorser's fall from grace, scandal or unexpected death, the insurer said Thursday.

Celebrity Product RecallResponse, available from Boston-based Lexington Insurance Co., offers $5 million in coverage for a stand-alone policy and up to $1 million of coverage through an endorsement, AIG said in a statement.

Coverage 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 have a significant adverse impact on a company's product, AIG said in the statement.

The policy covers costs associated with removing products and packaging from the marketplace, including their transportation, disposal or destruction, AIG said. It also reimburses companies for the removal of marketing and advertising material bearing the celebrity's image.

The company said the coverage is designed to provide protection for companies of many sizes, including start-ups and small and midsize businesses that are engaging a celebrity endorser.

“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,” Lexington President and CEO Jeremy Johnson said in the statement.

Cyclist Lance Armstrong's doping scandal highlighted the risks companies can face when a celebrity spokesman's life takes an unflattering turn.