INSURANCE GUIDELINES

INTRODUCTION 

The following information has been prepared as a reference tool for those charged with the responsibility of the production of a television commercial. It is not intended as a substitute for legal advice, which may be provided solely by a practicing attorney, nor professional insurance advice, which should be provided by a registered broker.

It is stressed that thorough knowledge of one's own insurance policy and good communication between the Production Company and the client or agency can avoid expensive pitfalls and failed relationships. However, all policies contain limitations, restrictions, and exclusions, and so communicating with the Broker in the bidding stage is also important.

In recognition of the fact that the production company is in the best position to identify and quantify risks attendant to the production of a commercial, the amount of insurance coverage is a decision made by the production company. The contracting agency/client should ascertain the type and amount of coverage carried by the production company for a specific job and determine whether that coverage is consistent with their company's policy on insurance, and the perceived risks associated with the production of that commercial. If the advertiser or agency wishes to be an "added-insured" on a production, this must be specified, as it is not normal procedure.

The first section (items 1 through 9) refers to the standard risks that are covered in the producer's Entertainment Production Package policy based on the standard Documentary, Industrial, Commercial & Educational (D.I.C.E) boilerplate.

Typically, the premium that the production company pays on this package is assessed by the insurer as a percentage of it's declared or audited gross annual production costs, the maximum risk limit of any one production, deductible levels, and with consideration given to the corporation's history for risk management and claims.

The second section (items 10 through 26) refers to risks that can be optionally included in the basic Entertainment Production Package policy, or to specific risks that require underwriting on a per job basis.

CPAT is not responsible for any errors, omissions or inaccuracies contained in this document. This document is for reference only and it is not the intent or desire of CPAT for readers to rely on anything contained herein. The terms of your insurance package may vary from those contained herein and, accordingly, recourse should be had to the terms of your policy for an accurate determination of your coverage.

 

SECTION 1:
 

1. NEGATIVE FILM & VIDEOTAPE

Covers physical loss, damage or destruction of films or erasure of tapes, including sound tracks, before a protection duplicate has been made by the insured. Coverage excludes fogging, faulty equipment, faulty processing and faulty use, such as wrong exposures or faulty manipulation by a cameraperson, the use of incorrect stock, or exposure to extreme changes in temperature prior to processing. Normally, coverage does not apply for exposed film that is accumulated for shipping and processing for a period in excess of 3 shooting days, or 5 consecutive days whichever is less, although extensions can be applied for. 

The Company's limit of liability with respect to any one occurrence is limited to production costs in the production company's budget as bid, and cannot exceed the amount stated in the declarations of the policy contract. However, that limit can be increased to accommodate a special project.

Under this section, the term of coverage is continuous, as long as the policy is in force, from the commencement of a declared production until the date that a protection or duplicate negative or tape has been completed and stored separately from the original, or, thirty days after the completion of postproduction. However, In the event that editorial and post production are not contracted by the Production Company, coverage is no longer in effect once care and control of the original negative or videotape has been passed by the Production Company or its supplier to another company or individual. (See item 26 - Postproduction). 


2. FAULTY STOCK, EQUIPMENT OR PROCESSING

Covers the loss, damage or destruction of films or tapes resulting from fogging, faulty equipment, faulty processing or accidental erasure of videotapes. Coverage excludes faulty use by a cameraperson, such as wrong exposure or faulty manipulation, or the use of incorrect stock. Furthermore, claims are not considered unless the equipment has been fully tested and proved to be sound prior to production. Under this section, the company's limit of liability with respect to any one occurrence is the insurable production cost as budgeted, and cannot exceed the amount stated in the declarations of the policy contract. However, that limit can be increased to accommodate a special project. 


3. PROPS, SETS & WARDROBE

Covers props, sets, scenery, costumes, wardrobe and similar property, owned or rented for physical loss, damage or destruction during the production on an "all risks" basis.

Under this section there is a sub limit on coverage with respect to antiques, objects of art, rugs, furs, jewelry, precious or semiprecious stones/metals/alloys. If the potential exposure exceeds the Company's policy amount it should advise its Broker in advance so that the sub limit can be increased. Generally, this will not increase the premium, but the insurance underwriters frequently require that the Company hire 24-hour security guards. 


4. MISCELLANEOUS EQUIPMENT

Covers cameras, camera equipment, sound, lighting and grip equipment owned by or rented to the Production Company for physical loss, damage or destruction during the production on "all risks" basis. Insurers normally require that all rental equipment is returned to the rental company at the end of the shooting day, or 24-hour security must be provided. Unless otherwise specifically arranged, losses are adjusted on an actual cash value basis. The value of a piece of equipment does not necessarily equate to a full replacement value. This is especially relevant in the area of videotape, where technological advancements have out-performed equipment purchase prices. 


5. OFFICE CONTENTS

Covers furniture, fixture, tenants' improvements and equipment in the offices owned by or rented to the Production Company for physical loss, damage or destruction on an "all risks" basis (This can be included in Miscellaneous Equipment sometimes). Laptop computers now have a minimum deductible of $2500. 


6. EXTRA EXPENSE

Reimburses the Production Company for extra expenses over the scheduled budget due to loss, damage or destruction of property (building, contents, props, sets or equipment) used in the production.


7. PROPERTY DAMAGE LIABILITY

Covers loss, damage or destruction to property belonging to others while in the care, custody or control of the Production Company. It usually excludes automobiles, watercraft, aircraft and property covered under other sections of the package such as props, sets and wardrobe, miscellaneous equipment, etc. 


8. MONEY & SECURITIES

Reimburses the Production Company for loss of cash money and securities, including third party theft. Coverage for employee theft is available on an optional basis. 


9. COMPREHENSIVE GENERAL LIABILITY

This protects the Production Company against lawsuits for bodily injury or property damage arising out of the making of the production (filming, taping, etc.). Coverage can include suits arising out of the use of non-owned automobiles but excludes personal injury suits (libel, slander, copyright infringement, etc.) Minimum CGL limit for the City of Toronto is currently two million dollars. At the same time, the minimum limit for Provincially owned property is ten million dollars. 



SECTION 2:


10. CIVIL AUTHORITY

This is an optional basic package extension to cover extra expenses necessarily incurred by the interruption, postponement or cancellation of a scheduled production due to the action of a civil authority that prohibits access to a property or facility contracted by the Production Company in connection with the scheduled production for a reason other than the inability or failure of the Production Company to secure proper filming permits. 


11. DISRUPTION OF POWER

This is also an optional basic package extension to cover loss due to power failure on or off premises used or to be used in connection with a declared production.
This does not include Generator breakdown or failure.


12. MECHANICAL BREAKDOWN

This is an optional basic package extension to cover loss due to a mechanical breakdown outside the producer's control, causing a delay or postponement in connection with a declared production. 


13. AUTOMOBILES

Regardless of whether a vehicle is licensed or unlicensed, and whether it is used on public roads, closed sets or private property, the responsibility for placing primary Auto Liability coverage is with the owner of the vehicle, and because the law differs, the insurance must be written in the form prescribed by the laws of the Province or State in question. However, when individuals or companies lease or rent vehicles to a Production Company their automobile coverage becomes invalid unless they have extended coverage on their policy to accommodate this activity.

A payment of a car allowance to individuals does not necessarily invalidate their insurance coverage, but the owners of the vehicles should be advised that they should have their insurance policies endorsed to permit this business use. 

If a client requests automobile coverage and the Production Company becomes responsible for providing primary automobile liability insurance on any vehicles, it would have to implement an Automobile Liability policy. Again, automobile liability coverage varies from province to province and state-to-state, so specific coverage will have to be arranged based on where the vehicles are registered.

Commercial Vehicle Physical Damage liability to hired vehicles is available as part of the basic Entertainment Package Policy. Deductibles are usually high (10% of loss, minimum $1500 maximum $7500). Consideration should be given to purchasing physical damage coverage from the hire company, whose deductibles are usually around $500 for autos and $1000 for trucks.


14. SPECIAL VEHICLES

The Company's insurance requirements will vary depending on the province or state that the vehicle is being used in, and whether the vehicle is being used on public or private property. There are too many variables to deal with each particular circumstance. The Company should always check with its Broker prior to the use of any of these types of vehicles. 


15. HAZARDOUS STUNTS & SPECIAL EFX

The Company should notify its broker and discuss any possible requirements. It should be prepared to submit storyboards, or scene descriptions as well as names and resumes of the supervising Co-coordinators. (This item also often triggers additional production expenses required by law such the attendance of Fire Department and/or Emergency Task Force Officers). 


16. USE OF AIRCRAFT

Insurance coverage with respect to the use of aircraft is limited in the Standard Insurance Package, so the Production Company should always advise their Broker well in advance of the anticipated use of it, and should not sign a contract with respect to the use of an aircraft without first having them review the document.

If the aircraft is being used as a prop/set and is not in motion then damage to the aircraft itself would be provided under the Props/Sets/Wardrobe coverage, and liability coverage would be provided under the Commercial General Liability policy. However, if the plane is in motion either under its own power or being propelled by any other means (i.e. being towed) then coverage may be compromised.

Brokers generally recommend the following guidelines when using an aircraft:

Require the company from whom you are renting/leasing the aircraft to add the Production Company as an additional insured to their insurance policy.
Request a waiver of subrogation with respect to hull damage.
Request that their policy contain a Cross Liability clause.
Request that their policy includes coverage for passengers.
Request that a Certificate of Insurance showing the limits of coverage and confirming that items a, b, c & d have been included in their insurance policy.

Obtain a Hold Harmless Agreement from the owner of the aircraft. This should be included as part of your rental agreement. Legal counsel should assist with this agreement.


17. USE OF WATERCRAFT

Similar to the use of aircraft, coverage with respect to the use of watercraft is limited. The Production Company should always advise their Broker well in advance of the anticipated use of any watercraft. The Company should not sign a contract with respect to the use of any watercraft without first having them review the document.

If the watercraft is being used as a prop/set and is not in motion then damage to the watercraft itself would be provided under the Props/Sets/Wardrobe coverage. If the watercraft is in motion then there is a sub limit for physical damage to the watercraft - please check the policy for sub limit amount.

Liability coverage is provided under the Commercial General Liability policy, but is frequently limited to non-owned watercraft less than 26' feet in length (please check the policy re: length). If the watercraft is in excess of this length limitation, or if the Company is required to indemnify the watercraft owner, then specific coverage arrangements must be made prior to using the vessel.


18. USE OF RAILWAY EQUIPMENT

The Production Company should always advise their Broker well in advance of the anticipated use of any railway cars or equipment, and should not sign a contract with respect to use of trains without first having its Broker review the document.

If the train is being used as a prop/set and is not in motion then damage to the train itself would be provided under the Props/Sets/Wardrobe coverage. If the train is in motion then there is a sub limit for physical damage to the train - please check your policy for sub limit amount.

Liability coverage is provided under the Commercial General Liability policy. If the Production Company is required to indemnify the train owner then specific coverage arrangements must be made prior to use of the train. 


19. ANIMALS

If the Production Company is responsible for the hiring and payment of animals, the Company should consider how the non-availability (due to illness, injury or death) of the animal would affect its ability to shoot. If the inability of the animal to perform would result in substantial delays or cost overruns, then the Company should consider insuring the animal under Cast coverage. As with Cast insurance on people, the insurance company would require a medical to be performed on the animal by a veterinarian in order obtain sickness coverage. This should not be confused with non-performance of a trick.

The Company should also look very closely at the contract that is entered into with the animal wrangler/owner who is providing the animal. A copy of the contract should always be forwarded to its Broker prior to signing, to see if the contract contains any insurance provisions, indemnity clauses or hold harmless clauses.

Animal Mortality coverage can be provided. In order to trigger this coverage the insurer will require full details of the animal including type of animal, name and registration no. (if applicable), period of use and value. Coverage is accident only, pending receipt and acceptance by the insurance company of a veterinary certificate indicating the cause of death. In addition to mortality coverage, the Company may wish to consider purchasing coverage for legal liability for loss of or injury to the animal(s) that is in its care, custody or control.


20. CAST INSURANCE

Typically the agency or client, due to union or guild agreements, contracts cast. Therefore the Production Company purchases non-performance liability due to illness, injury or death only when contracting the performer directly. Coverage will normally require submission of medical history, and an examination. The same applies to non-performance by a director. In either case, providing the Production Company subscribes to it, Workers Compensation will cover the individual's salary and medical expenses, but not the costs incurred by production interruption, delay or cancellation. The minimum deductible usually starts at $10,000.00 and the limit is subject to the declared maximum.

Employment contracts and guild/union agreements should be examined to establish if the Production Company has any obligation to provide medical insurance or workers compensation coverage on these individuals. If a proposed contract has provisions for this type of coverage then the broker will recommend that the Company forward a copy of the contract to them prior to signing so that they can advise the company on the costs associated with providing coverage. If a contract has already been signed obligating the Company to provide medical insurance or workers compensation coverage, it should contact its Broker immediately so that appropriate arrangements can be made.


21. ACCIDENTAL DEATH OR DISMEMBERMENT

This special coverage is available on an all risks basis for any member of the crew, cast or production personnel. Typically this should be considered at any time anyone is working at risk beyond the scope of Workers Compensation. Helicopter or aerial photography is a prime example. Employment, Union and Guild contracts should be examined for liability exposure and referred to the Broker. Stunt performers are not covered.


22. WORKER'S COMPENSATION

In Ontario, the Workplace Safety and Insurance Act is administered by the Workplace Safety Insurance Board. Under the Act, employee insurance is not compulsory for motion picture and video production companies, however prudence dictates otherwise. The cost of insurance coverage is currently $0.94 per $100 of insurable earnings (2003).

Two things however should be kept in mind. First every Province and State has it's own law and rates and therefore contracts are not transferable. Second, WSIB has a different interpretation of "employee" compared to Revenue Canada, which will trigger premiums on all employees, whether sub-contract, freelance crew or staff employees. 


23. PRODUCTION OUTSIDE CANADA

When production activities occur outside Canada there may be additional insurance coverage that is either mandatory or that should be considered. Requirements and recommendations will vary depending on the country in question and the type of activity occurring there. Furthermore, most insurance companies now require that they be notified of any production occurring outside North America.

A list of some of the most commonly purchased coverage outside Canada is as follows:
US Workers Compensation
Foreign Voluntary Workers Compensation
US Auto Liability
Foreign Difference in Conditions/Excess Auto Liability Insurance
Out of Country Medical Insurance
Locally Admitted Foreign Liability Insurance
Political Risk/War Risk Insurance
Civil Commotion/Riot Insurance
Weather Insurance
Kidnap & Ransom Insurance
Terrorism Risk
Transit Insurance for transporting the Film elements


24. ERRORS & OMISSIONS

Provides coverage for the Production Company, or any employee or director acting on behalf of the company, and indemnifies them for any sums that they may become legally obligated to pay as damages resulting from an invasion, infringement or interference with the right to privacy or publicity; infringement of copyright or trademark; libel, slander or other forms of defamation.

However, because of the nature of advertising and the relationship between the Client, Agency and Production Company E&O coverage is not normally available to the Production Company directly for a television commercial. Instead it is recommended that the Company request to be added to the Agency or Client policy as an additional insured. 


25. WEARTHER

Insuring against inclement or unsuitable weather is available on specific productions. However it is usually cost prohibitive (premiums are often equal to the cost of the shoot), and will frequently require hiring third party observers.


26. POSTPRODUCTION & STORAGE

In the event that the Production Company contracts the postproduction (see item 1 - Negative Film & Videotape) full coverage remains in place for thirty days after completion or until the original elements have been stored separately from the broadcast master, whichever comes first. If the production company is to be responsible for ongoing storage of the original elements, terms and conditions should be agreed at the bidding stage.

However, when the Agency/Client contracts the postproduction outside the Producer's budget, the liability to the Producer ends when it is no longer in control or possession of the original negative or element. This creates a window of risk until such time as the postproduction is complete. In these instances, it would be prudent to transfer the original negative to a dedicated digital tape at the initial dailies transfer stage, and in so doing provide a reasonable, if not completely perfect, protection element. 


CONTRACTS IN GENERAL

All of the coverage afforded under the insurance policies is subject to the provision that all contract terms for performance of services, use of facilities, property, equipment and supplies are sufficiently longer than the Insured's original scheduled time for completion of the production so as to allow a reasonable time to cover possible delays in completing production. It is recommended that all contracts provide this margin of safety.

When entering into any contracts that contain insurance provisions, indemnity provisions or hold harmless provisions it is recommended that the Company reviews these documents with its Broker prior to signing to ensure that they are not assuming obligations that go beyond the scope of coverage provided by its existing insurance program. The Production Company policy may not include all coverage necessary to protect it for the obligations it may be assuming.

Even if insurance coverage would respond to obligations assumed under contract, the Broker may recommend amendments to the contract in order to better manage the risk being undertaken by the Production Company. It is common for the Broker to work with both legal representatives and production personnel to re-draft contracts.


ADDING A THIRD PARTY

It is important for the production company to understand the different terms when adding another company or individual to its policy.

Foremost for any production is that the third party is only added for the period required (i.e specific shoot dates). Exceptions to this rule might be ongoing suppliers, or government agencies.

In the event that a third party is added to the certificate as a "named insured", that individual or company has equal status under the policy as the insured company. This requires notice to the broker and potential premium increases.

"Added insured" is the term to use in Canada to add a third party to the policy. Under this terminology, the production company's insurer will respond to those events that are the fault of or the responsibility of the production company, and the third party is dragged into a claim as a result of the production company's fault.


CLAIMS

All accidents or circumstances that give rise, or may give rise, to a claim should be reported to the Broker promptly. If the claim involves a criminal act (i.e. theft) it must also be reported to the police.

The Production Company should not settle a loss without first consulting their Broker or the assigned insurance adjuster, and should never admit liability or discuss a claim with a third party without prior consent from the insurance company.


SHIPPING

Caution is advised when considering both distant and local shipping of film or video originals.Use of experienced couriers with electronic tracking systems in place, as well as proper shipping advice notes and records is highly recommended.