We don't want it, but we need it!
All Audio/Visual production involves a number of specific risks and unforeseen difficulties. Insurance can be obtained in respect of certain risks in an amount sufficient to meet any reasonably foreseeable claim; however, all insurance is limited in nature and in amount.
RISK MANAGEMENT - Insurance
Insurance may be obtained in respect of an A/V production, and it will likely be required by investors, distributors and others with a financial stake in the production, sufficient to reduce or eliminate such risks. Insurance is usually of two types: Production Insurance and Producer's Errors & Omissions Insurance.
Production Insurance usually covers the following risks:
1. Loss or destruction of the media holding the creative property (e.g. master tape, hard drive);
2. Death, Injury or Illness of one key individuals, (e.g. lead cast and director in a film);
3. Faulty recording devices or recording medium (e.g. camera and tape);
4. Loss or destruction of key production property (e.g. props, sets and wardrobe);
5. Loss or destruction of Miscellaneous Equipment;
6. Third Party Property Damage;
7. Comprehensive General Liability;
8. Producer’s Errors and Omissions.
What IS E & O Insurance?
E&O insurance protects producers, distributors and other beneficiaries from the expensive costs of litigation that is based on defamation, invasion of privacy, false light privacy, copyright infringement, right of publicity and unfair competition and related matters.
What E&O does NOT cover.
Producer's sometime assume that they are protected against ANY error or omission they may make. But this is not the case. As with any insurance, the terms govern coverage; however some matters will not be covered, including contract related claims (e.g. the editor of a film sues the producer for breach of contract). Furthermore E&O will not cover a claim where a producer has knowingly violated the rights of another person. E&O is designed to cover the damages to a third party caused by the producer, but not the production's own losses.
A significant process in obtaining E&O insurance is the clearance procedure.
RISK MANAGEMENT - Completion Guarantor
A Completion Guarantor issues a Completion Bond which guarantees to a producer, and more importantly, the investors, distributors and others with a financial interest in the A/V product that production will be completed on time and on budget. The cost of the Completion Bond is a line item in the production budget but often subject to a bonus payable to the production company as a reward if the producer brings the production in on time and budget. Should the production fall behind or go over budget during production or post production, the Guarantor may take the production duties away from the producer and use its own personnel to complete the production on time and budget. In such a case, the Completion Guarantor guarantees the technical quality of the A/V product but not its aesthetic quality.
E&O insurance and a Completion Bond are generally are obtained just prior to commencement of principal photography.