Reputational harm

The damage or negative impact on a person’s or entity’s reputation.


What is reputational harm?

Reputational harm is the negative impact on a person’s or business’s reputation. This can lead to a significant financial loss for your business.

Reputational harm can result from actions such as defamation, slander, or business misconduct, not physical harm. It affects a company’s image and the trust of its customers or partners.

Reputational harm vs. libel vs. defamation: What’s the difference?

Reputational harm, libel and defamation are all related but distinct concepts.

Reputational harm is a broad term for damage to reputation from incidents such as defamation and libel. It also extends to issues like breaches of business ethics or poor customer service.

Defamation is the act of making false statements that harm someone’s reputation. It can be categorized into two forms: libel and slander.

Libel is a type of defamation that specifically relates to written or published defamatory statements.

While both libel and defamation can cause reputational harm, the scope of reputational harm is broader and includes any action that could negatively impact a company’s public image.

Insurance policies that cover reputational damage typically provide protection against a wide range of threats to a company’s reputation and address the financial consequences of such threats.

The consequences of reputational harm for small businesses

Reputational harm could include situations such as a high-profile legal case accusing your company of unethical behavior, or a viral social media post falsely alleging fraudulent activities by your company.

These incidents can damage your company’s public image and lead to:

  • Reduced customer trust and support
  • Financial losses
  • Hiring difficulties and lower employee retention
  • Legal and regulatory costs due to potential lawsuits and legal fees
  • Difficulties attracting investments and business partners

Business insurance for reputational harm

Reputational harm can be a significant setback for a business, potentially erasing years of trust and loyalty built with customers. It’s comforting to know that your business has financial protection in the event of a reputational crisis, providing peace of mind for both owners and employees.

Many small businesses often turn to general liability and professional liability insurance as their primary coverage. Both of these insurance types offer protection against reputational damage.

General liability insurance helps provide protection against harm that may arise from claims of slander or libel.

On the other hand, professional liability insurance, also known as errors and omissions insurance, offers coverage for reputational harm that may result from the provision of professional advice or services.

Directors and Officers (D&O) insurance is another type of coverage that protects executives and board members from actions that could potentially harm the organization’s reputation.

These policies typically come into effect during covered incidents, such as legal proceedings or public relations crises. So, in a heated moment, you can focus on what’s important — running your business.

Protecting your business with NEXT

At NEXT, we’re 100% dedicated to small businesses. With 24/7 access to your policies, you’ll always be prepared for whatever comes your way. All you have to do is apply online and follow the prompts to access your custom instant quote in 10 minutes.


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Any starting prices or premiums represented before an actual customer quote are not guaranteed and are representations of existing premiums of active policies as of December 6, 2023. To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.