Carriers often look at the revenue an agency reports, its payroll, the services it sells, the promises in its client contracts and its claims record, then adjust for the controls it can show. A new owner can influence the contracts, the controls and the accuracy of the numbers reported, but not the insurance market. This guide is for the buyer of an advertising, digital, public relations or media buying agency who needs to model insurance cost and manage it without cutting coverage.
The short answer
- The main drivers are the revenue base, payroll, services mix, client contract terms, claims history, limits and retentions, and cyber and payment controls.
- How an application counts revenue can matter. An agency that buys media for clients may report large pass-through spend next to its own fees, so ask each carrier what it rates on, answer each application as it defines the term and keep one reconciliation.
- Workers' compensation premium follows payroll and class, so a wrong class or a loose payroll estimate is one of the few cost items you can correct with paperwork.
- Savings from higher retentions (the part of each claim you pay first) or lower limits move cost from premium to your cash flow. Compare the options in dollars you would pay after a claim, not only in annual premium.
- A quote is not coverage. Do not drop old policies until the new ones are confirmed in writing.
What do insurers look at when they price a marketing agency?
Underwriters build a picture of how likely a claim is and how large it could be. For an agency that picture rests first on people, services and promises, with property and field work as add-ons. The table lists the main drivers, why each matters and what a new owner can do. It describes factors, not prices.
| Driver | Why it matters | What a new owner can do |
|---|---|---|
| Revenue base | Professional and general liability may be rated on revenue, so ask each carrier for its basis. Reported receipts can include media bought for clients | Ask what each application means by revenue, answer exactly what it asks, and keep a reconciliation of fees and pass-through spend that you reuse every year |
| Services mix | Strategy work, social media, public relations, media buying, production and events carry different exposures | Describe the services accurately and say whether any physical work, such as signs or displays, is done in house |
| Payroll and headcount | Workers' compensation premium is a rate per $100 of payroll for each class, times the payroll, with the experience mod (a multiplier based on past claims) applied | Check the class, the payroll estimate and the ownership change report |
| Property, equipment and office | Property and business income are priced on the values and locations you report, and equipment that travels may need its own coverage | Report replacement values for laptops, cameras and production gear, ask whether equipment is covered off site, and confirm the lease's insurance clause |
| Events, production and travel | Event crews, sample distribution, sign or display work and staff driving personal cars on client errands add liability, workers' compensation and hired and non-owned auto exposure | Tell underwriters what the agency actually does, keep event contracts and vendor insurance on file, and ask how field work would be rated before the first event |
| Freelancers and subcontractors | Uninsured contractors can be added to the audit bill, and their work raises the question of who answers for mistakes | Collect proof of coverage, written agreements and invoices |
| Client contracts and required limits | Indemnities and insurance clauses drive the limits an agency buys and the endorsements it needs | Review the largest contracts and negotiate terms the policies cannot meet. See the contracts, licenses and bonds guide |
| Claims history and open notices | Loss runs show frequency and open matters, and a prior claim can narrow the market | Close or document old claims and confirm every notice of circumstances was filed |
| How far back the policy looks (retroactive date) | A longer look-back for past work is a larger exposure for the carrier | Ask to keep the seller's date, and compare that cost with a tail |
| Limits and retentions | Higher limits cost more. Higher retentions lower premium but leave you paying the first dollars of a claim | Match limits to contracts and retentions to cash on hand |
| Cyber and payment controls | Cyber and crime underwriting often asks how access, backups and payment changes are handled | Document the controls and fix gaps before renewal |
| Owners, investors and board | Employment practices and directors and officers (D&O) policies respond to people and governance | Buy only what the staff size and board structure call for |
Does pass-through media spend change what I pay?
It can. An agency that buys media for clients can show large billings next to its own fees, and an application may ask for either number. The Census Bureau defines media buying agencies as businesses that purchase advertising time or space from outlets and resell it, so a media buyer can be the party to the media contract, not only an adviser. Which figure a carrier rates on is a question for that carrier, and how to report it is a question for your accountant.
A hypothetical example. An agency bills clients $10 million a year, of which $7 million is media bought on the clients' behalf and $3 million is its own fees. One carrier's application asks for gross revenue. Another asks for fees earned. If the buyer completes both with the same $10 million figure, one quote may rest on a base more than three times larger than the fee income that actually creates professional exposure. If the buyer reports only $3 million to a carrier that wanted billings, the policy could be questioned later. The fix is a written answer from each carrier on its rating basis, and an answer to each application that matches what it asks.
The same pass-through spend creates money-handling risk. Paying vendors on emailed invoices is where payment fraud and credit risk sit, and insurance generally does not cover a client's failure to pay. See funds transfer fraud and new owners.
How do payroll and workers' comp factor in?
An agency's cost base is mostly people, so payroll drives workers' compensation premium directly. Two items are in the owner's hands: the class and the payroll estimate. The experience mod (a multiplier based on past claims) follows the business, so the owner's job is to report the ownership change and check the mod for errors. The workers' comp and payroll guide for marketing agencies covers audits, freelancers and the ownership change report, and workers' comp class code corrections shows how a class is fixed.
Does covering the seller's past campaigns change what I pay?
Professional and media policies are usually claims-made, which means they respond to claims made while the policy is in force, for work back to a set date (the retroactive date). Price and terms reflect how far back the policy looks. A buyer who keeps the seller's retroactive date takes on more past work for the carrier to underwrite, and that can change terms. A buyer who resets the date lowers that exposure but leaves the agency exposed to claims about earlier work. Compare the cost of keeping the date with the cost of buying a tail (an extended reporting period on the old policy) before choosing.
Loss runs matter too. An open claim or a notice of circumstances can limit which markets will quote, and an account that standard carriers licensed in your state decline may be placed in the surplus lines market through a licensed broker. That market has different rules and state guaranty funds generally do not back it, which is a difference to understand, not a judgment on quality. See admitted vs excess and surplus lines for an inherited account and closing old open claims. Where the problem is an exclusion rather than price, see the coverage gaps guide for marketing agencies.
Do cyber and payment controls change the price?
They can influence both price and whether coverage is offered. The Internet Crime Complaint Center, which takes reports for the Federal Bureau of Investigation, counted 24,768 business email compromise complaints and about $3.0 billion in reported losses in 2025, up from 21,442 complaints and about $2.8 billion in 2024. Those figures cover all victims in all industries, not agencies, and they likely understate the true total. They show why insurers ask how a business changes vendor bank details and who can approve a wire.
The simplest improvements are procedural: call back a known number before changing bank details, require two approvers above a set amount, and keep client data access limited. Document them in writing so the application is accurate. The guide to cyber controls underwriters ask about lists the usual underwriting questions.
What can a new owner change in the first year?
- Get each carrier's written rating basis (fees or billings) and keep one reconciliation that ties your answers together.
- Collect freelancer agreements and proof of coverage before the workers' compensation audit.
- Decide the retroactive date question with a tail quote in hand.
- Compare the largest client contract limits with the professional, cyber and crime limits you hold.
- Document payment call-backs and access reviews before the renewal application.
- Set retentions you could pay from cash. See raising deductibles the smart way.
Mid-term changes can cost more than they save, so read when to remarket before moving anything. More ideas are in 12 ways to lower premium after an acquisition.
How should I model insurance cost in my deal?
Use the seller's historical insurance expense as a starting point, not a forecast. An agency seller may have run on a short retroactive window, skipped a social engineering option on the crime policy, or carried no employment practices or directors and officers cover because a sole owner needed none. Each of those adds cost for a buyer with investors, a board or a lender, and each flows straight into earnings before interest, taxes, depreciation and amortization (EBITDA), so the gap matters for valuation and debt service.
Model each line on its own driver: professional and media on revenue and claims history, cyber and crime on controls, workers' compensation on payroll including freelancer audit exposure. Then ask a broker for indicative terms on the program you actually want, and treat them as estimates until a carrier quotes and binds. Guides that help: budgeting insurance in your acquisition model, the seller was underinsured, so true EBITDA is lower, and the library pages on professional liability cost and cyber insurance cost. A Morrow review can compare the inherited program with the business you bought, and any new terms depend on carrier underwriting.
Keep reading
- Just Bought a Marketing Agency? What Insurance Do You Need?
- Coverage Gaps New Owners of Marketing Agencies Find
- Do Marketing Agencies Need Workers' Comp? Class Codes and Audits
- 12 Ways to Lower Premium After an Acquisition Without Cutting Coverage
- Budgeting Insurance in Your Acquisition Model
- All guides for new business owners
Frequently asked questions
How much does insurance cost for a marketing agency?
It depends on the carrier and the account, so no single number is reliable. Price follows the revenue base, payroll, services, contract terms, claims history and limits. A broker can give indicative terms once it has your declarations pages, loss runs and contracts. A quote is not coverage until a carrier binds it.
Is professional liability or workers' comp the bigger cost for an agency?
It varies by agency and by state. Workers' compensation follows payroll and class, while professional liability follows revenue, services and claims history. Ask for each line separately so you can see which one deserves attention first.
Does my pass-through media spend count as revenue for insurance?
It depends on the carrier's application and rating basis. Ask each carrier in writing whether it rates on gross billings, fees earned or something else, answer each application as it defines the term, and keep one reconciliation so the figures tie out across applications and years.
Will raising my deductible lower my premium?
It often does, but it moves cost to your cash flow. Choose a retention you could pay from cash after a claim, and ask whether defense costs count toward it.
Can a new owner lower insurance cost without cutting coverage?
Sometimes, in part. Correcting a class code, cleaning up contracts, closing old claims and documenting controls can help at renewal. Results depend on carrier underwriting, and none of these is a promise of a lower premium.
References
- U.S. Census Bureau: 2022 NAICS Descriptions (541810 and 541830)
- FBI Internet Crime Complaint Center: 2025 Internet Crime Report
- FBI Internet Crime Complaint Center: 2024 Internet Crime Report
- NCCI: ABCs of Experience Rating
- IRMI: Errors and Omissions Insurance
Just bought a business? Get your insurance reviewed.
Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.
Morrow · 25 New Chardon Street, 4th Floor, Boston, MA 02114
This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.