Film & Television Production Insurance
An Interview With Barbara L. Passin
By Shirley Craig
Now, we all know production insurance is vital to any film, television or video project - no matter what your budget - but sometimes indie filmmakers think if they are making a movie with money raised from just their friends and family they don’t need insurance. Wrong! No matter how small your budget you still need insurance.
Why is insurance needed for your production? Well things happen. Cameras can get lost, the house your friend loaned you to shoot in can get damaged, accidents, do unfortunately happen, even when you are taking the best precautions.
This week we met with Barbara L. Passin, an Assistant Vice President at Momentous Insurance Brokerage in Los Angeles to discuss the ins and outs of production insurance, the different kinds of insurance policies available, what you need to know about them and why indeed you do need production insurance!
So Barbara, tell our readers what are the pros and cons of production insurance?
There are no cons to insurance except for the cost. I think it’s very important that every producer and production company have insurance in place before producing a movie.
What kind of insurance, in your estimation, is mandatory for any production?
General liability. This policy provides coverage for third-party claims against bodily injury and property damage. So, for example, if you’re at a location filming and you damage a home, damage the sidewalk on a street, that would be property damage. Or for bodily injury, let’s say a third party is walking by and trips over an electrical cord and hurts themselves. This policy is a must have. If you can’t afford every kind of insurance, you definitely need to have a general liability policy. The most important thing about general liability policy is the defense costs are outside the limits of liability.
And what does that mean?
Let’s say you’ll have a million-dollar general liability policy but the defense costs are outside the limits. In today’s world, the average lawsuit can run you up to $400,000 just in defense costs alone.
So if I have a million dollars general liability, I’m covered for a million dollars to pay the person who’s ultimately suing me, but then I’m also going to have to pay the cost of defending that case.
Exactly. It is covered, but it’s covered outside the limits. So it’s above the million dollars.
Is there a cap at which you’d have the defense costs?
No, there’s no cap. Unfortunately in the United States people are filing frivolous lawsuits daily, so it’s so important to have a general liability policy just to pay for your defense costs.
Does it also include medical costs too? For example, if somebody’s on set and a lamp falls on their head and cracks open their skull, the policy covers all their medical costs?
And will it cover all the costs if they say they’ve been traumatized or they can’t work until their head is healed?
Coverage is only for third parties, so it does not apply to employees or independent contractors. Crew would fall under workers’ comp. So a third party is—let’s say you’re in the city shooting and a person just happens to walk by and trips over a cord or, like you mentioned, a piece of equipment falls on them. So it’s always a third party. Same with your property, it’s not your property; it’s the third person’s property.
So for accidents to crew members, that’s all covered by workers’ compensation.
Yes and we’ll get into that in a bit.
NON-OWNED HIRED AUTO LIABILITY
This coverage provides Automobile Liability insurance that protects the insured from claims alleging bodily injury and/or property damage as respects to the insured’s utilization of a non-owned or hired/rented vehicle. The exposure for this type of loss also includes employees of the insured whom may use their own vehicles in the course of their work for the insured. Non-Owned & Hired Physical Damage is also an option in the event the insured may be held responsible for damages to the vehicle. For example, if your employee is running an errand for you during business hours and is involved in an accident and a third party files a suit against your employee/independent contractor, you can also be named in the suit since you are their employer at the time of the accident. Very important, when an employee rents a vehicle or truck, the lease agreement needs to be in the name of the production and not in the name of the employee to have coverage under the policy.
And this coverage will protect me?
This will protect the production company and pay for the defense costs.
Non-owned hired and auto policy includes all the production cars or all the cars that I rent for the production?
Does it include picture cars? For example, let’s say there’s a vintage Rolls Royce in my movie and the production assistant who’s driving it gets into an accident. Am I covered to replace the vintage Rolls Royce and/or whatever’s necessary to fix it?
Usually these policies will have limits, and for something like that you’d have to probably underwrite it because it’s out of the ordinary; but it can be insured.
So if I were making a movie that did have something very expensive in it that could have circumstances where it could be at risk, I need to underwrite it, which means name it on the policy?
Or just discuss it with your insurance carrier and make sure that they’re aware of the situation.
So let’s go to workers’ compensation coverage. In the world of entertainment, oftentimes employees and independent contractors, freelancers, are one in the same, unless the independent contractor has his own workers’ comp coverage and can provide you with an insurance certificate proving that. In Southern California, the law requires that if you have an employee, you need to have a work comp policy in place.
Right, regardless of the status of that employee.
Exactly. [With] this coverage, if they’re injured on the job, it’ll pay for their medical bills. If they’re injured and can’t work, it’ll pay a percentage of their wages. I know a lot of production companies hire payroll companies because if you’re going to have a lot of stunt activities in your movies, the insurance carriers prefer you to use a payroll company.
And why is that?
They don’t want to pick up the liability, so they make sure you use a payroll company. But even if you go through a payroll company, it’s very important that you have a Contingent Work Comp policy in place. It’s minimum premium and also payroll companies will not cover [or] insure volunteers or unpaid interns. And also, for example, let’s say you’re shooting late at night and all of a sudden you just add someone to your crew and you don’t have time to call the payroll company, or they’re not open. I think it’s very, very important that you always have a contingent work comp policy in place, even if you go through a payroll company for these kinds of instances.
So contingent workman’s’ comp is different from regular workman’s’ comp?
It’s actually still a work comp policy, but your payroll company’s really going to be your primary policy, but just in case, there’s been issues where a payroll company will say, “You had control over this situation. I don’t want to cover it.” Just in case something happens, number two, for volunteers or unpaid help and number three, if you’re hiring someone at a time where you can’t get a hold of your payroll company last minute.
So volunteers or unpaid interns are covered by your workman’s’ comp?
The one that you would bind with the insurance carrier.
Right, so that’s the contingent part of it.
Okay, whereas if I do it only through the state of California, it’s just covered for those people that I’m paying money to in terms of their salary. So an unpaid intern is not covered under general workman’s’ comp?
A payroll company will not cover a volunteer.
And they wouldn’t fall under third-party liability? So if the lamp fell on the head of an unpaid intern, would they be covered under liability?
Well, that’s not the intent of a [general liability] policy, but if this person did get hurt and there was no work comp in place, they would have to file a law suit naming the production company and prove the production company was negligent.
It would not be an insurance claim.
Exactly. They have to file a lawsuit, and the insurance carrier would research, and obtain the details of the incident to see if the Production Company was negligent.
Workman’s’ comp policies are based on the state of hire. So it’s very important because different states have different laws, For example, New York has extremely strict laws and if you’re hiring employees in New York, you’ll have to also always take out a New York disability policy.
So workman’s’ compensation in New York is different from a disability or it’s included in workman’s’ comp?
If you have New York employees as well as having the work comp policy, you’re also required in New York to have a disability policy which is a separate policy, and the cost is minimal The premium is very inexpensive, but if you don’t have this policy in place, you can receive fines up to $70,000 and even higher.
So in other words, if I’m based in California but I’m doing a week’s worth of location shooting in New York, I have to have not only my California workman’s’ comp, I have to have my New York workman’s’ comp for that week?
No, this is how you do it. A regular work comp policy is an all-state policy. So we could add any state, except the monopolistic states, to the policy, but the only time you have to bind a New York disability policy is if you’re hiring employees that reside in New York… If you’re in California and you’re going to shoot in New York and all the employees reside in California, you do not need a New York disability policy.
Dice package or producers package…consists of several different coverages. One of the coverages is for props, sets and wardrobe, which will cover you if you have to rent any props or if you have costumes, scenery, sets. If it’s damaged, it’ll pay for the cost to replace it.
Then there’s Extra Expense. Extra expense reimburses the out-of-pocket expenses from the incurred claim. So let’s say you’re shooting a scene and your camera malfunctions and you can’t finish the shoot - extra expense will pay for you to reshoot that scene. So that’s very important.
Okay, third-party property damage is extremely important. This is when you are shooting in a location that’s in the production company’s care, custody, and control. Third party property damage will pay for any damage that occurs to the location. So third-party property damage is a must!
Can you explain what the seven days means?
Let’s say you’re going to shoot in the same house for a month, you do have General Liability property damage coverage, but if you’re at this location for more than seven days, [General Liability] only applies for seven days. People will always say, “How come I've got to take out this if I have it over here in the general liability policy? Why are you still recommending third party?” Plus on third party, you can get higher limits. I always recommend million-dollar limits.
Now we have miscellaneous equipment. That covers your camera, sound and lighting equipment in the same manner it would for the props, sets and wardrobe. The miscellaneous equipment coverage is, actually this whole production package, dice producers package, is worldwide. The general liability and the auto and work comp are not worldwide.
So if I have a camera truck and it gets broken into and all the camera are stolen, I’m covered.
Most likely, depending on the scenario. The equipment that is included under a DICE Producer’s Package is covered anywhere in the world, and it also includes earthquake and flood. Please keep in mind if you are binding a mono-line Equipment/Inland Marine policy, you need to specially inform your Broker/insurance carrier that you want worldwide coverage and EQ and Flood included. It’s not automatically included.
Then the policy also covers negative film which reimburses the production company for any additional out-of-pocket expenses which are incurred in reshooting of the portion which is unacceptable as a result of damage to the negative.
Does it extend to the fact that my hard drive that had my whole shoot got dropped into the lake by mistake?
Correct, it’s covered. The only thing it doesn’t cover is faulty stock because that’s a separate coverage. So the faulty stock would cover you just like the same coverage of the negative film would cover you, but that’s if a loss is caused by faulty stock film and if it was when they were editing it in the lab, it accidentally did something incorrectly.
What about digital? So many people shoot digitally, these days. What happens if they plug the hard drive in and the footage isn’t coming through properly?
Well if it’s equipment damaged, that might be faulty camera, but if the digital files are faulty, that would be faulty stock.
GUILD (UNION) TRAVEL ACCIDENT
What about the crew and cast who are members of a Guild like the DGA, etc.
Yes. This coverage is necessary if any member of the cast or crew belong to any Guild or Union involved with the Entertainment Industry. Cover is blanket and the terms are designed to meet with signatory requirement.
If you have key people in your film who are unreplaceable—director, actor, most valuable players—[cast insurance] is intended to reimburse you for any extra expense to complete principal photography due to the death, injury or sickness of any insured artist(s). When you bind the coverage the accident portion is automatically included. To include the medical portion, the person needs to go to a doctor and have a medical exam from one the carrier’s doctor before approving the coverage. Many times there may be pre-existing conditions that are discovered and may be excluded. You could also just take out accident-only because some actors may be very private and don’t want to submit to a medical exam.
So, say you have a blood test, the actors gets an all “clean” and then halfway through the shoot the actor, like Phillip Seymour Hoffman, dies of an overdose. It’s not like he died of a disease or a car accident. Are they covered?
I can’t answer that question because I don’t know if there were any exclusions on his coverage due to his past drug addiction. If there were no exclusions than the production company would have had coverage.
So you are covered for things that come up accidentally.
Yes. Accidents are included automatically.
But if he isn’t known as a drug addict and he just got very unlucky, he’d be covered.
Yes, as long as there were no exclusions with regard to incidents related to drugs or a drug overdose.
Another insurance option coverage is civil authority.
What does that do?
You get reimbursed out-of-pocket expenses as a result of interruption. Let’s say there’s a bomb threat or a natural disaster where they decide to close down a certain building, this is called civil authority.
Right, but what happens with things like weather?
Weather Insurance is a separate coverage you can purchase. Civil authority is more like a riot, an explosion, bomb threat, and is shut down by the city.
So civil authority means someone has come in and overridden your control of the situation.
Exactly. And shut down, perfect example: If you’re shooting at LAX and a bomb threat [happens], they shut it down.
ERRORS AND OMISSIONS
This covers and protects a production company against legal liability and provides defense costs against unauthorized use of titles, copyright infringement, theft of an idea, characters, plots, plagiarism, libel/slander and also invasion of privacy. First of all, many distributors may not release a film without it. If you’re working with a network, working with a studio, they’re all going to require you to have this.
But if you’re an independent producer who’s raised the money independently…
You still need to have this. This is so important to have because it also pays for your defense costs.
Let’s say you go ahead and shoot the script, you’ve made the movie and then, all of a sudden, the film gets released and somebody comes out of the woodwork and says, “That’s my script. I’m suing you.” You’re covered for that?
Yes, the policy would respond.
This is why we do what is referred to as ‘greeking it out’—For example in a scene if somebody’s drinking a soda, it’ll just have on the word ‘Cola’ on the can. The art department has come up with a label that says ‘Cola’ instead of Coca-Cola because in order to use Coca-Cola, you have to have permission.
Exactly. The usual policy people will contractually ask you to have is one million occurrence with a three million aggregate and usually with a $10,000 deductible. The typical policy term is three years.
If you’re going to have stunts and pyrotechnics in your film, you need to underwrite it. You need to get licenses from the pyrotechnics. You need to obtain bios on the stunt individuals and pyrotechnic technicians to make sure they’re experienced and qualified. You need to underwrite the situation. You need diagrams of exactly where it’s happening. It’s very important and I think sometimes some producers don’t realize that whenever you are hiring vendors, stunt people, pyrotechnics, you always want to request and obtain a Certificates of Insurance naming your production company as an additional insured because you do not want to pick up their negligence.
Explain what a Certificate of Insurance is.
Let’s say you’re working with a pyrotechnic company. It will show proof that they have insurance for themselves. You’re asking them to name your production company as an additional insured. Then, if they are negligent and an accident occurs and are sued, and unfortunately when disasters happen everybody gets sued, you are protected. So make sure that the pyrotechnic company and other such venders name you as additional insured on their insurance because you don’t want to be liable for their negligence. You also want to make sure they have adequate insurance coverage and limits.
Now if a stuntman is hired as a stuntman and he’s doing a stunt and he falls off the roof the wrong way, is he covered under my workman’s’ compensation?
This is where the payroll company comes into play because this is when the production companies will say, “We don’t want to pick up this stunt person. Go to the payroll company.” Number one, you need to underwrite it. Number two, you could have a risk management. Insurance carrier companies have risk management employees. You should have them come out and go over the stunt to make sure it’s safe. You could always take out a special AD&D policy, Accidental Death and Dismemberment, which sometimes is a good idea.
Do insurance carriers read scripts? For example, if I come to you to cover a movie, do you read the script?
Yes, if there is one available.
So if a script is not available you only go based on the producer and the discussion?
I would ask for a synopsis, budget and also discuss details of the filming to see if any stunts, pyrotechnics, aircrafts, watercraft, etc are involved in the movie?” I would underwrite it completely. Very important.
When you use the word underwrite, that means that you’re basically acknowledging that this is going on?
Exactly. You need to get all the information.
Okay and if something is done right on the fly, does one have an obligation to call the insurance company and say, “We decided to add a car chase”?
Definitely. You should call your broker, your insurance broker and let them know.
NON-OWNED AIRCRAFT LIABILITY
Another coverage is non-owned aircraft liability. If you’re going to be using helicopters or planes this coverage is necessary. Again, you have to obtain a certificate of insurance from the aircraft company naming the production company as additional and insured including a waiver of subrogation with respects to the hull. Even though you are obtaining a certificate from the aircraft company you still need to have this coverage in place.
Would this apply even if the helicopter or plane is sitting on the ground and never moves?
If you don’t even turn on the engine, this can be insured under the “Props Sets and Wardrobe” coverage on your DICE Producers Policy.
Weather insurance will protect you if you can’t continue to shoot due to the insured peril, rain, snow, hurricane, etc.
That the rain will delay your shoot.
Yes it’s expensive, and there are different options you can choose depending on your insurance needs. For example, with regard to rain, you can choose how many inches it can rain before it will interfere with your filming. You can pick an option of how many hours of rain during a 9 hour shoot it can rain before it will shut you down.
So some people might choose to say, “I’m going to shoot this movie or commercial if it’s only up to three inches of rain but anything beyond three inches…”
Exactly, because some people could say, “Well, if it only rains two inches, I could still shoot, but if it rains four inches, I won’t be able to.” This insurance is costly, and it has to be bound 10 days prior to the shoot.
ANIMAL MORTALITY COVERAGE
Then we have animal mortality coverage if you’re using animals. I remember I was filming a commercial and they were using a half a million dollar polar bear named Angie. And I had to insure the bear. The reason why these animals are so expensive is because they’re trained. Animal Mortality (death only) coverage can be arranged. This coverage reimburses the owner for the value of the animal when the animal dies arising out of filming activities. The value of the animal must be agreed to in advance. Accident Only coverage can be bound immediately and sickness/illness can be included upon receipt of a current veterinary certificate.
That the animal is in good health?
The lamp falls on the dog.
Yes, that would be included under the accident portion of the coverage.
Does this include exotic animals, any kind of animal?
Any kind of animal.
UMBRELLA LIABILITY COVERAGE
An umbrella policy gives you additional limits above any liability coverages, which would be your general liability, your third party, auto liability and work comp. So if all these policies are one million, you can buy a five million umbrella and that will increase your liability limits up to six million. I always recommend an umbrella policy for big shoots. Lots of times producers will hire a production company to do the filming for them and, as I mentioned before, if you do hire a production company or any vendors at all, just always make sure you obtain a Certificate of Insurance naming your production company as an additional insured so you don’t pick up anybody’s negligence; very important.
Right and one last thing, cost. Does it vary depending on budget?
Yeah, I’m glad you mentioned that because let’s say you’re doing a very inexpensive short film or whatever, you could take out a short-term policy. Sometimes it’s more cost effective to take out annual policy because it’s just a little bit more and then you’ll get coverage for the whole year.
Barbara, this has been really valuable information that I think every producer needs to know.
It’s been a pleasure. Thank you.
Barbara has been in the insurance industry since 1994 and has a wealth of knowledge in all aspects of risk management. She has particular strength and expertise in entertainment, insuring touring entertainers, loan outs/ shell corps and film and TV productions. Barbara is highly service-oriented and treats each of her clients as if they are her only client. She prides her-self on her tenacity and willingness to go the extra mile to secure the best coverage and pricing for her clients, leveraging her strong relationships with insurance companies to negotiate competitive terms.
Next month we’re going to sit down again with Barbara and discuss insuring music tours, concerts and events on the road. Stay tuned.