June 30 (Bloomberg) -- Call it “Jon & Kate Plus Liability.”

Jon and Kate Gosselin’s marital separation, broadcast nationwide last week on the U.S. reality show that tracks their lives, may leave the show’s producers and insurers at risk of lawsuits. Broadcaster TLC, owned by Discovery Communications Inc., put the show on hiatus until August.

“That’s what’s scary for insurers about reality,” said Lorrie McNaught, vice president of Aon Corp.’s entertainment insurance broker. “It’s unscripted.”

The couple’s split underlines the danger that unanticipated events on reality shows and reality-based films can lead to extra costs from delays, reshoots and lawsuits. Participants in Walt Disney Co.’s “Extreme Makeover” show and News Corp.’s “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan” film have sued companies that backed them, saying the firms were responsible for the fallout that followed their on-camera embarrassment.

“Jon & Kate Plus 8,” which tracked Jon, 32, Kate, 34, their 8-year-old twins and 5-year-old sextuplets, should be among the least worrisome shows to underwrite, said Wendy Diaz, the entertainment underwriting director at the show’s insurer, Fireman’s Fund Insurance Co.

‘Not Doing Anything’

“They’re really not doing anything,” said Diaz, whose firm is a unit of Munich-based Allianz SE, referring to Jon & Kate’s format. “It’s pretty much walk-talk. So as long as the appropriate releases are in place, it’s not something we would think is that dangerous.”

The Gosselins have had their marriage and family life documented since 2007 on the series, which is TLC’s most popular show, according to the network. The show attracted a record 10.6 million viewers to TLC on June 22, the network said, citing Nielsen Co. The couple’s marital difficulties have become fodder for gossip magazines amid allegations of Jon’s infidelity.

If the Gosselins felt the production company “caused or somehow led to this decision, they easily could sue the production company,” McNaught said. “The biggest issue for insurers with respect to reality television is the risk of the participant.”

Discovery spokeswoman Michelle Russo didn’t return calls for comment. Aon/Albert G. Ruben, the Aon unit McNaught works for, isn’t TLC’s broker, McNaught said. Maggie West, a production coordinator at Figure 8 Films, the Carrboro, North Carolina-based producer of “Jon & Kate Plus 8,” said the company wouldn’t comment.

Fewer Stunts

“The underwriter should try to follow what’s going on with a show,” said Gene Williams, Chubb Corp.’s worldwide entertainment manager. If the show changes, “the underwriter needs to understand that so that we are underwriting the risk with our eyes open and are not surprised.”

Liability risks on reality shows have shifted from stunt operations in shows like the now-canceled “Fear Factor” to more emotional issues such as those on “Jon & Kate Plus 8,” said Tully Lehman, a spokesman for the Insurance Information Network of California, a Los Angeles-based non-profit that provides insurance information to consumers and the media.

“We used to see situations in which you saw a lot of stunts where physical injury could be possible,” he said. Now, there are more programs “with more compromising situations as opposed to a stunt, something that could lead to embarrassing situations.”

“Extreme Makeover” participant Deleese Williams sued Walt Disney Co. and its ABC television network for causing emotional distress and wrongful death when the show canceled her makeover in 2004.

‘Ugliness’ Challenged

The show prodded family members to comment on her “ugliness” before sending her home to Conroe, Texas, without a makeover. The experience strained family relationships and caused mental distress to her sister, who committed suicide, according to court documents. ABC settled a lawsuit for an undisclosed amount, the Los Angeles Times reported in 2007.

Suing production companies for emotional distress is rarely successful, said Martin Ridgers, senior vice-president of underwriting at Entertainment Brokers International.

“You may have had an argument 10 or 15 years ago,” Ridgers said. “If you go onto a reality TV show now and try to claim you didn’t understand that this could be invasive on your personal life, I think any state appeals court will look at them and say ‘you’ve got to be joking.’”

‘Borat’ Suits

Two South Carolina college students suedNews Corp.’s Twentieth Century Fox Film Corp. in 2006 after Sacha Baron Cohen’s 2006 film “Borat,” which featured them making racist and sexist comments. They were denied a court order to cut the scenes in December 2006.

Two Romanians sued Twentieth Century Fox in November 2006 saying they and fellow villagers were unjustly ridiculed on screen when Cohen’s satirical film passed off their town, called Glod, as Borat’s hometown in Kazakhstan. Their lawsuit was dismissed in 2008.

If the Gosselins do decide to file a suit against the production company, “it doesn’t necessarily mean that they are going to be successful,” Chubb’s Williams said. “There still could be a large claim for defense costs.”

To contact the reporters on this story: Jamie McGee in New York at Jmcgee8@bloomberg.net;

Last Updated: June 30, 2009 00:01 EDT