What type of insurance should a filmmaker consider?
Internet Filmmakers' FAQ
Insurance in this day and age is a necessary evil in many industries, film included. Insurance is there to cover you against unexpected costs which may be incurred in the process of making a film. Costs can range from simple things such as accidental damage to equipment or to a location, through to damages claims where someone is injured on set, or even provision of the necessary funds to complete the film if it goes significantly over budget.
The types of insurance which are available (and suitable) for a film production will largely be dependent upon the budget and, to some degree, the experience of the key personnel involved. The following types of insurance are the most common found in the film industry:
Public Liability Insurance
Covers the production against claims made if a member of the public is injured on your set or filming location. It also provides cover for damage to property incurred in the course of production. This type of insurance is highly recommended for all film productions, regardless of budget.
Employers Liability Insurance
In many countries, employers liability insurance is a legal requirement, certainly when the productions hires more than a certain number of people. It covers the production for damages and claims made by an employee who is injured or killed during the course of the production.
Once you consider all of the costs that go into a shoot, exposed negative or tape stock becomes a very valuable commodity. If your original negative or camera tapes are lost or damaged the costs of reshoots can be very high. Most producers take out negative insurance to cover them against this possibility.
Although still advisable, this type of insurance may not be necessary if you are using your own equipment during the shoot. However, most rental houses will not even supply you with equipment unless you can show that it is covered against loss or damage by some form of equipment insurance.
Props & Sets Insurance
As with equipment vendors, many props houses will not supply you with props unless you can show that they will be adequately insured against loss or damage. Certain locations (e.g. a historic building) might also require you to take out a form of buildings and contents insurance to cover any damage the production might cause while using the location.
Errors & Ommissions Insurance
Covers the production in the event that the completed is film sued for infringing intellectual property rights, defamation, privacy laws etc. Most commercial distributors will not agree to take on a film without an "E&O" insurance policy in place. E&O insurance can be time-consuming to arrange because the insurnance company will require a full due dilligence audit to ensure that you have taken all the necessary steps against E&O pitfalls.
For higher budget films, the financiers will have a significant amount of money invested in the film. As such, they will be keen to see that the film is completed so that it can be distributed and afford them a chance of making their money back. A completion bond is a form of insurance which guarantees that the film will be completed. Specialist insurance companies, often known as "bond companies" provide this type of cover. If the film runs over budget by an agreed amount, the bond company will stump up the cash to complete the film (as well as taking over control of the production from the producer). This type of insurance is very expensive (typically 1% of the budget) and is therefore only available for larger productions.