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6 Celebrity Endorsements that Should have had Scandal Insurance

6 Celebrity Endorsements that Should have had Scandal Insurance

Bad celebrity behaviour does wonders for their infamy. It has the opposite effect, according to research, on the brands they endorse. Whether you’re Nike or Burberry, you cannot escape the financial losses of a loosely licentious celeb. Enter, scandal insurance.

What is Scandal Insurance?

Companies are turning to celebrity scandal insurance to protect themselves from this risk. That’s right, insurance against the loss of profits your boozed up endorsement model may wreak on your otherwise moral product.

Aon is a leading sports insurance broker in the United States. Aon stated to the New York Times that companies are adding more stringent moral clauses to their endorsement contracts to cover more perils. Traditionally, such moral clauses cover the victim company of a celebrity scandal if they are arrested and convicted. Given that this rarely happens, they’ve expanded this to include any occurrence of moral turpitude. This is more expensive.

Endorsement insurance covers the company for:

  • the cost of the advertising (broadcast and print)
  • the cost of hiring the celebrity
  • and, now, the cost of lost profits.

Since Tiger Woods cost seven publicly listed US companies $12 billion in market value in one month, no companies are taking their chances.

Celeb Scandals that Cost Endorsing Companies Huge Amounts

These celebs scandals lost them their endorsement contracts and cost the endorsing companies huge amounts.*

6. David Duchovny

Just as the esteemed shoe company, Johnston & Murhpy’s, adverts appeared featuring the X Files star, he checked himself into rehab for sex addiction. Within 48 hours, the posters featuring Duchovny were pulled out the store window on Madison Avenue and the endorsement was cancelled.

5. Lindsay Lohan

Freaky Friday starlet Lindsay Lohan lost the role of Linda Lovelace in the forthcoming film of the 70s porn star as a result of her drug addiction. She also became uninsurable, forcing Proactiv to cast Katy Perry and Avril Lavigne as their anti-acne faces. Since then, the star has landed one small league endorsement contract with clothing brand Fornarina, which didn’t do well.

4. Kate Moss

The hottest ego to hit the streets of London before Naomi Campbell, Kate Moss was photographed doing lines of coke. This forced H&M, Chanel, and Burberry to cancel all endorsements simultaneously.

3. Charlie Sheen

After being arrested on charges of domestic violence, the star lost his endorsement contract with Hanes clothing, who used him in broadcast commercials. To make matters worse, Sheen lost his role on Two and a Half Men. He was earning a comfortable $1,8 million per episode, making him the once-highest paid actor on television.

2. Wayne Rooney

He paid a hooker £1,200 and lost £12 million in endorsements. The football player cheated on his pregnant wife with a prostitute after he had signed endorsements with Coca-Cola for being a stand-up family man. His other endorsements are also in jeopardy.

1. Tiger Woods

Once the highest paid athlete in the world, Woods’s endorsers lost the most amount of money in just one sex scandal. The top five sponsors (Accenture, Nike, Gillette, Electronic Arts and Gatorade) lost between two and four percent of their aggregate market value in just ten days after the scandal began. This cost woods $35 million in sponsorship deals.

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