Brands are taking out new 'disgrace insurance' policies to cover themselves if their celebrity brand ambassadors get caught with their pants down.

High-profile celebrity sex scandals are fuelling an insurance industry boom, say sector insiders, with take-up of so-called 'disgrace insurance' policies designed to protect brands when celebrity ambassadors become embroiled in sleaze up by almost a third.

"We have probably seen an increase of about 30% in the last couple of years," said Mark Symons, underwriter at insurance provider Beazley. "Because there have been some very high-profile cases in the past few years there has been an uptake in interest in this."

Brand owners face losing millions if they are forced to terminate partnership deals as a result of a public scandal. "Either you lose the money or you get a policy that will pay the cost of you restarting a campaign," explained Symons.

Death, disability and disgrace cover is nothing new in the world of insurance, but the increased emphasis on the disgrace element is. The cover rests on whether an ambassador's actions can be said to be unforeseen or out of character, and therefore detrimental to a brand.

Recent cases have seen Coke can plans to put Wayne Rooney's face on Coke Zero products following allegations about his sex life. It is estimated that brands endorsed by Tiger Woods saw up to $12bn wiped off their value after his marital misdemeanours came to light. "The media is driving this interest," said Richard Woods of independent insurance brokers Tysers. "We are definitely seeing more enquiries but I don't think this is going to make me a millionaire this is still very much a luxury for brand owners."

The fear of becoming embroiled in sleaze as a result of a brand ambassador's indiscretions has been enough to turn some companies away from the celebrity endorsement route altogether, said Robert Barron of insurance broker Lockton.

"If you start buying disgrace insurance, at the end of the day there's a cost, so people are starting to look again at regular types of promotion that are not to do with a certain individual," said Barron. "With a celebrity you never know who or what could come out of the closet.

"If you pick the right celebrity you can add millions to sales, but choose carefully. Experience shows rich and famous people are never safe from scandal."

Karen Earl, chairman of sponsorship agency Synergy, added: "Disgrace insurance can provide financial peace of mind but a brand should have strategies in place to deal with any situation that may affect brand reputation."