Do Insurance Companies Cover TCPA Damages?

Type: Blog
Topic: Do Not Call Solution

The short answer is, not always. While some insurance policies may offer coverage for Telephone Consumer Protection Act (TCPA) violations, it is not guaranteed, and businesses often find themselves facing substantial out-of-pocket costs. General liability and errors and omissions (E&O) insurance typically do not cover TCPA damages. Even when certain policies appear to offer protection, exclusions may apply, leaving companies vulnerable to massive fines, settlements, and legal costs.

Considering the risks associated with TCPA violations, relying solely on insurance is a dangerous strategy. Companies need to be proactive in preventing these violations in the first place, and that’s where PossibleNOW’s Do Not Call platform comes in.

Our DNCSolution helps businesses manage customer communication preferences, stay compliant with TCPA regulations, and mitigate the risk of costly lawsuits and penalties.

What Types of Insurance Cover TCPA Damages?

While TCPA violations are considered regulatory infractions, certain insurance policies may provide some level of coverage (though this is not a guarantee, nor should this be taken as legal counsel). These typically include:

• Cyber Liability Insurance: Some cyber liability policies may cover TCPA claims, as they are often categorized under privacy violations. However, this coverage is not universal, and businesses must scrutinize the policy terms to confirm what’s protected.
• Media Liability Insurance: This insurance can sometimes cover claims related to advertising and telemarketing practices, which may include TCPA violations. However, this is not always the case, and exclusions are often common.
• Directors and Officers (D&O) Insurance: In some cases, D&O policies may cover TCPA claims, particularly if the violation is linked to a broader business decision. However, coverage under these policies is often limited and heavily dependent on the specific terms.

Even when a policy includes TCPA coverage, there are often significant limitations and stipulations that reduce the scope of protection. TCPA damages can be severe, and businesses should not assume they will be covered entirely—or at all—by their insurance policies.

Common Exclusions in Insurance Policies for TCPA Claims

Many insurance policies that seem to offer coverage for TCPA violations come with exclusions that limit or eliminate protection. Common exclusions include:

Willful Violations

If a business is found to have knowingly violated TCPA regulations, insurance policies typically do not cover the resulting fines or damages. Intentional actions often fall outside the scope of protection.

Fines and Penalties

Many policies exclude coverage for regulatory fines and penalties, which make up a significant portion of TCPA-related costs. Businesses may find that while certain defense costs are covered, the fines themselves are not.

Class-Action Lawsuits

As TCPA violations frequently lead to class-action lawsuits, the potential financial impact can be enormous. Unfortunately, some insurance policies exclude class-action claims, leaving businesses unprotected against the most costly type of litigation.

Why Relying on Insurance Alone Is Risky for TCPA Compliance

While insurance may offer some relief in the event of a TCPA violation, depending on it alone is risky. Coverage is often incomplete or comes with exclusions that prevent full protection.

Additionally, the reputational damage that comes with a TCPA violation cannot be fixed by an insurance payout. When customers feel their privacy has been violated, the trust that has been built can quickly erode.

Proactive compliance is the key to avoiding these risks altogether. Rather than relying on incomplete insurance policies, companies can take control of their compliance efforts with PossibleNOW’s DNCSolution, preventing costly violations before they happen.