Distributor's Errors and Omissions (E&O) insurance

Much like the producer's E&O insurance, distributor's Errors and Omissions (E&O) insurance covers  distributors from lawsuits that may arise due to the content of the material they are distributing.

Distributor's E&O insurance differs  from Producer's E&O in that distributors are insured for a list of titles they are distributing. In order to add a production to a distributors E&O policy a minimum of one year of E&O policy needs to have been in force. For each film that you distribute, you will need to ask for evidence of previous e&o coverage.

The premium is determined by the estimated annual revenue that is expect from the list of titles to be insured. A deposit premium is paid and then the deposit is adjusted at the end of the policy year based on actual distribution revenue. A distributors policy is typically much less expensive as compared to extending individual e&o policies. The adjustment rate is usually 10 cents per $1000 of revenue.

To get a quote, we will need to have an application completed and we will need a list of the titles to be covered. Would you like me to send you a copy of a blank application?

WHY E&O POLICIES ARE NEEDED?

1. Ie. The script of your movie/show is slightly similar to another production, therefore a claim for plagiarism could arise.
2. Covers the insured against defamation, libel and slander suits
3. Covers against intellectual property rights
4. Typically most distributors and broadcasters will not distribute or air any production without it.
5. It protects a company or individual from financial loss.

 

TYPICAL E&O CLAIM SCENARIOS

• An action brought against a production company for the production of a movie which is similar to events depicted in a novel.
• A defamation/slander suit brought against a production company based on a recognizable likeness  between a fictional character in a tv series and an actual person.
• A production company is sued for unauthorized use of Titles and/or Music/Stock Footage, for not acknowledging underlying works such as books, scripts of screenplays or for not requesting permission to acquire rights

Obtaining E&O Insurance for your Film Production and Preventing Litigation

This article is an excellent introduction to what is and what is not covered by a Film Producers e&o Insurance Policy.

The author is an attorney that has spent a considerable amount of time working with the Canadian Film and Television industry. She has represented international film insurance companies for over 30 years.

Also discussed in the article:

Overview of Clearance Procedures

• Standard Film and TV Clearance Produres
• Docudramas
• Documentaries
• Fair Use: Criticism and Parody
• Minimizing The Risk Of Copyright and Submission Claims
• Companion Materials, The Digital Age and More

 

Film Insurance: E&O Claims Made Policies Vs. Occurrence Policies

CLAIMS MADE E&O POLICIES

Claims Made E&O Policies cover claims that are made during the policy term. The loss may have occurred in the past, but as long as it is reported during the current policy term, it can trigger coverage. In order for coverage to continue, the policy must stay in force.

With this type of policy, endorsements can be made so that the policy responds to incidents which occurred before the policy start date, also known as “Prior Acts” coverage. Tail Coverage is another  extension that can be obtained wherein the insurer will cover events that occur while the policy is in force, but which the insured is unaware of during the policy period, and are reported to the insurer after the policy terminates. By obtaining tail end coverage, the claims based policy is in effect converted to an occurrence policy.

 

Pro’s of a Claims Made E&O Policy

A benefit of this type of policy is that if a claim arises relating to incidents which occurred before the policy start date, the claim may be covered. Another reason why this type of E&O policy is purchased is because it is less expensive than occurrence based policies. Typically the premium increases over the first five years of coverage in increments proportional to the claims reporting for that experience.

 

Con’s of a Claims Made E&O Policy

Once a “claims-made” policy has expired, purchasing insurance for past events will become difficult, expensive and perhaps not possible. Once coverage has expired, claims can no longer be submitted, even if the claim occurred during the policy term.

 

OCCURRENCE BASED E&O POLICIES

Occurrence based E&O policies cover losses that occur during the policy term as long as the project/film is released or broadcast during the dates at which an incident causing damage occurs. Although the loss can be reported years later, it must have “occurred” during the policy term. This type of E&O policy may  not cover occurrences that happened prior to the policy being in force.

 

Pro’s of an Occurrence Based E&O Policy

A benefit of this type of policy is that there is no need to renew the policy to maintain coverage. Also, years after this type of policy has lapsed, a claim can be made for incidents that occurred while the policy was in force.

 

Con’s of an Occurrence Based E&O Policy

This type of E&O policy is typically more expensive than claims based policies because the insured is prepaying for tail costs whether the tail gets used or not. Another disadvantage is that if a claim arises before delivery to the broadcaster or distributor, any defense costs associated with the claim may not be covered. It’s important to speak with your broker about whether Prior Acts coverage is included on your Occurrence Based Policy.

 

WHY E&O POLICIES ARE NEEDED?

1. Ie. The script of your movie/show is slightly similar to another production, therefore a claim for plagiarism could arise.
2. Covers the insured against defamation, libel and slander suits
3. Covers against intellectual property rights
4. Typically most distributors and broadcasters will not distribute or air any production without it.
5. It protects a company or individual from financial loss.

 

TYPICAL E&O CLAIM SCENARIOS

• An action brought against a production company for the production of a movie which is similar to events depicted in a novel.
• A defamation/slander suit brought against a production company based on a recognisable likeness  between a fictional character in a tv series and an actual person.
• A production company is sued for unauthorized use of Titles and/or Music/Stock Footage, for not acknowledging underlying works such as books, scripts of screenplays or for not requesting permission to acquire rights.

 

WHAT CAN AFFECT THE COST OF AN E&O POLICY?

• Whether an attorney’s services were used to secure clearances and licenses
• The coverage limits
• Coverage Territory
• Type of distribution
• Type of production ie. Documentary, TV Series
• Subject matter of production
• Production Budget

New Film Insurance Company in Canada - Competition Benefits Producers

The World's largest Film Insurance Company opens in Canada creating more Competition to Benifit Producers. The Fireman’s Fund Insurance Company has opened an office  in Toronto.  As Canada’s largest Film Insurance Broker, we have been selected as an approved broker that can obtain quotes and production coverage from Fireman’s Fund.

Front Row is an independent broker that represents Film Producers – not the insurance companies. We can offer you quotes for your project from all four of the Film Insurance companies in Canada: Chubb, Fireman’s Fund, Premiere and Travelers.

If you are not receiving four quotes from the broker that you are using, please contact us and we would be happy to provide the missing quotes so that you ensure you are receiving the best premium and coverage available in the marketplace.

We can make the process simple for you.  If you are able to provide us with the following information, we will have an indication of costs and/or a quote for you within 24 hours or less:

1.            Dates of  Filming

2.            Copy of Budget Top Sheet

3.            Synopsis and Script

 

There is no cost or obligation – you have nothing to lose and you may benefit with a lower premium.

Our staff have a combined 205 years of experience insuring film productions in Canada.  In the event of a claim, we will ensure that you are paid the money you are owed as quickly as possible.  We have offices in Montreal, Toronto and Vancouver with a staff in excess of 16.

Articles about our firm are available on our website.

E&O: Acquire proper permission before you eat at McD****** or drink a C***

It happens more often than you might expect: a producer completes a film, locks picture, makes a sale, and then drops by our law office to inquire about “clearing” the film for Errors & Omissions insurance coverage. In reviewing the film, we note that the producer filmed copyrighted and trademarked material, but failed to get the necessary permission to include it in the film.

E&O insurance policies insure against claims arising from accidentally infringing a copyright or trademark, invading someone’s privacy or otherwise getting tripped up on someone else’s rights. In order to qualify for E&O coverage, the film in question must be fully cleared and the producer must acquire all necessary permissions from third parties whose rights might otherwise be infringed. If a film includes material that potentially infringes a third party’s copyright and permission has not been acquired, there are a number of options to consider.

First, the film could be edited to remove the offending material. This is only a viable option if time, finances and/or creative willingness permit. Second, there may be an exception allowing the inclusion of certain copyrighted material in the film without permission.

Likely the most popular excuse for copyright infringements is the concept of “fair use”. Although referred to regularly in industry reference materials available here in Canada, fair use is a US principle based on the belief that it is not “fair” to find every copying to be a violation of copyright law if such copying was for certain purposes, including criticism or review. (For example, the concept of “parody” falls under fair use in the US and has provided many a filmmaker with substantial sources of otherwise protected material. Thank you Mel Brooks and Mike Myers!)

Fair use does not exist in Canada and is often used interchangeably, and often confusingly, with “fair dealing”, the concept found in the Canadian Copyright Act. Other than in very clear-cut cases, extreme caution must be used in relying on fair dealing, which is a very limited defense as the use of the material must be for “private study, research, criticism, review or newspaper summary”. Unfortunately, because there are no hard and fast rules available, it is impossible to define what is and is not fair dealing.

Other than fair dealing, in Canada, the concept of “incidental inclusion” may provide another possible exception to copyright infringement. If the use of copyrighted material is very minor and is incidentally and not deliberately included, (for example, a pre-existing credit card door sticker at a retail location), it is likely that the use will fall within incidental inclusion and will not be considered an infringement. It can become prohibitively expensive and time consuming to clear every protected item in a film, no matter how small the use.

If E&O insurance is required, and if none of the above options is feasible, in some cases it may be possible to “exclude” the offending material from the E&O insurance policy and effectively assume the risk yourself. (Be aware, however, that these types of exclusions may not be acceptable to broadcasters and distributors.)

The bottom line? Always, always, always ensure that you acquire all necessary permission to include any protected material in your film before you start shooting.

E&O Insurance - How much of your productions format is copyright-able

By: Doran S. Chandler - Roberts & Stahl, Entertainment Lawyers

Whenever a producer or writer dreams up a new idea for a television show, it doesn't take long for them to start worrying about someone pinching it and beating them to the punch. This is especially true in the case of news programs, game shows, and other reality based productions. Such productions are relatively inexpensive to produce and consist mainly of material with a questionable footing in copyright. This makes it accessible to a large number of producers and difficult to pitch and develop without tipping off competitors about a potential new trend.

A somewhat odd corollary to this is that the value of television formats has grown exponentially in recent years with the widespread licensing of formats to broadcasters or production companies in foreign markets. As a result, many producers want to know what they can borrow from existing programs, and whether they can protect what they have created. Only one notable Canadian case, Hutton v. Canadian Broadcasting Corporation, sheds some light on the issue. 

In Hutton, the Alberta courts considered whether the format of a music video magazine show could be copyrighted. The courts held that concepts and devices generally present in shows of the same genre were not protect-able, such as the mood of the hosts, the presentation of biographical materials, interviews, and the use of TV monitors in the set design. The courts also considered the use of infinity shots, bumpers and teasers to commercials, the use of montages, and the use of transitions like dissolves and back-to-back video playbacks, finding that these elements could not in themselves be protected. One characteristic the trial court found protect-able at trial were elements of "dramatic conceit" in the programs, or the entertainment fictions used to create drama in each program. The trial judge ultimately found that the plaintiff's show, Star Chart, was not a dramatic work within s.2 of the Copyright Act and thus not capable of being copyrighted. On Appeal, the Alberta court deemphasized the idea that dramatic conceit was protect-table and held simply that the works were not qualitatively similar and did not have any causal connection between them.

The end result of Hutton is that, while we have some idea about what Canadian courts will consider when evaluating a format, we don't really have a clear guideline for what is required to achieve a protect-able format. Adding to the uncertainty is that different standards of protection have emerged in other jurisdictions. In one case considering the copyright-ability of the format for Opportunity Knocks, a prominent UK copyright judge held that the elements of a "dramatic format" were too uncertain for copyright protection.

Meanwhile, courts in Holland and Brazil have granted protection to the Survivor and Big Brother formats, respectively, finding that copyright can subsist in the meticulous combination of individually unprotect-able elements in a format. Together, these decisions leave producers intending to rely on a specific format on shaky ground. Given that the legal right to use or to keep others from using a given format is unpredictable at best, it is a good idea to take some precautions when developing a show. One important security measure is to pitch your concept formally in conference using confidentiality agreements. Another useful precaution is to document and distinguish your concept with as much detail as possible, including the use of specific music, timing, camera angles and set design.

Registering distinctive slogans and catch phrases with the trademark office can offer protection, as can registering your detailed synopsis with the copyright office. Lastly, advertise your production as aggressively as possible because a strong market presence will always attract more copyright protection than anonymity. 
- Robert Galletti

Errors & Omission Insurance for Film and TV: The Value of a Lawyer

By: Doran S. Chandler - Roberts & Stahl, Entertainment Lawyers

Entertainment lawyers are often called upon to help clients obtain Errors & Omissions insurance for their productions. This job is easy if the needs of E&O insurers are considered before production begins. However, the process can be difficult and time-consuming if no thought is given to E&O coverage until after the final cut is locked.

E&O Insurance covers claims against a production, including breach of copyright or trademark, breach of privacy, defamation and breach of contract. These claims do not usually surface until there has been a broadcast or exhibition of the production.

E&O coverage is not included in the standard production insurance that is taken out for injuries, damage to property, etc. Only occasionally do you hear about the types of claims for which E&O insurance provides protection. For example, an action was brought several years ago against Dreamworks by an author who had written a book about the events depicted in the feature film Amistad. The author claimed that her copyright had been breached because the film told the story in ways which were similar to the book. More recently, one of the characters depicted in the recently released feature film Boys Don’t Cry has brought an action for breach of privacy because of the manner in which her life was depicted.

But most claims do not make headlines; usually they are threatened and then settled. Even if your insurer is ultimately successful in defeating a claim, it can still be costly because of the legal fees involved. And even if a claim is settled, the producer generally pays.

There are only a small number of insurers who provide E&O insurance to the entertainment industry. These policies are sold by specialized agents who are familiar with film and television production. If you have been involved in producing a documentary or television production, you have probably filled out the lengthy forms involved in making an E&O application. The application tells the agent how far along you are in the production and what the problem areas are likely to be, but it also serves as a handy checklist for you. Once the application is received, the agent will provide you with a quote and hand it over to lawyers who provide advice to the insurer about the risks involved with the production. The insurer will have its lawyer contact production counsel to review the potential problem areas and to discuss how these will be addressed.

The advantage of having your lawyer speak directly to the insurer’s lawyer is that often E&O insurance can be approved with a single phone call. The disadvantage from a lawyer’s perspective is that you sometimes end up doing the insurer’s dirty work by telling a client why certain material can’t be used. Because the insurer’s lawyer relies on production lawyers to decide whether to grant insurance, your lawyer is obliged to identify problem areas. If they do not, you (and the broadcaster) could end up being liable for the omission and your lawyer’s credibility can be affected.

Film and TV Producers Errors and Omissions Insurance Cost

Producers

Producers Errors and Omissions Insurance covers legal liability and defense for the production company against lawsuits alleging unauthorized use of titles, formats, ideas, characters, plots, plagiarism, unfair competition or privacy, breach of contract.

It also protects against alleged libel, slander, defamation of character or invasion of privacy. This coverage will usually be required by a distributor, broadcaster or financier prior to the release of any theatrical or television production. Production financing will usually not flow until E&O coverage is in force.

A producer will need to complete an application (contact david@frontrowinsurance.comfor a copy).

If coverage is required for the title, you must obtain a ‘Title Report & Opinion' from a recognized Title Clearance Company offering this service and submit the report to underwriters for final approval. You will also need a clearance report. 

Premiums for E&O vary based on the content of the production: a straight forward documentary would cost $3,000 to $4,000 and $5,500 to $7,000 for a feature film for the industry standard three year policy term. 

Every project is unique and requires a unique, custom E&O policy. 

Upon receiving  instructions from the Production Company to proceed, the broker will begin the clearance process. The lawyer for the underwriter will review and approve the clearances done by the producer’s lawyer. The fee for the insurance company lawyer’s service is included in the final premium. If coverage is not bound, the insurance company clearance fee (approximately $600) is payable and an invoice will be issued accordingly. 

You should check your production/distribution/financing agreements regarding the start date for Errors & Omissions coverage. Some financiers require Errors & Omissions coverage to be in place for the first day of principle photography before they will release payment to the producer. 

It can take up to ten (10) working days for a project to be cleared and coverage to be in place so start early to ensure that your cash flow is not impacted. 

The e&o policy will provide defense costs if the producer is sued and will pay the judgment costs if the producer is found liable. Until a lawsuit happens it provides the comfort of peace of mind.

Front Row Insurance Brokers are specialized film and entertainment insurance brokers. We are delighted to assist Canadian producers and production companies with their production insurance questions - please contact me david@frontrowinsurance.com. www.frontrowinsurance.com

Film E&O Clearances Procedures for Film Producers - Part 3 of 3

Proper E&O clearances for your film will result in the best possible coverage and cost for your producers E&O policy - otherwise known as multimedia E&O.

1. If the Production involves actual events, it should be ascertained that the author’s sources   are independent and primary (contemporaneous newspaper reports, court transcripts, interviews with witnesses, etc.) and not secondary (another author’s copyrighted work, autobiographies, copyrighted magazine articles, etc.).
2. Shooting script and rough cuts should be checked, if possible, to assure compliance with all of the above. During photography, persons might be photographed on location dialogue added or other matter included which was not originally contemplated.
3. If the intent is to use the Production on Videotapes, Videocassettes, Videodiscs or other technology, rights to manufacture, distribute and release the Production must be obtained, including the above rights, from all writers, directors, actors, musicians, composers and others, connected to the work, including proprietors of underlying materials.
4. Film Clips should not be used unless licenses and authorizations for the second use are obtained from the owner of the clip or party authorized to license the same, as well as licenses from all persons rendering services in or supplying material contained in the film clip; e.g., underlying literary rights, performances of actors or musicians. Special attention should be paid to music rights as publishers are taking the position that new synchronization and performance licenses are required.
5. In addition, dead persons (through their personal representatives or heirs) have a “right of publicity”, especially where there is considerable fictionalization. Clearances must be obtained where necessary. Where the work is fictional in whole or in part, the names of all characters must be fictional. If for some special reason particular names need not be fictional, full details must be provided to the Company in an attachment to the Application.
6. Consideration should be given to the likelihood of any claim or litigation. Is there a potential claimant portrayed in the Production who has sued before or is likely to sue again? Is the subject matter of the Production such as to require difficult and extensive discovery in the event of necessity to defend? Are sources reliable? The above factors should be considered in your clearance procedures and recommendations.

Please contact us if you have any further questions. Applications are available on our website.

Film E&O Clearances Procedures for Film Producers - Part 2 of 3

Proper film e&o clearance procedures will allow your film insurance broker to obtain the best premium in the quickest possible time. What follows is part 2.

1. Whether Production is fictional or factual, it should be made certain that no names, faces or likenesses of any recognizable living persons are used unless written releases have been obtained. Release is unnecessary if person is part of a crowd scene or shown in a fleeting background. Telephone books or other sources should be checked when necessary. Releases can only be dispensed with if the Applicant provides the company with specific reasons, in writing, as to why such releases are unnecessary and such reasons are accepted by the Company. The term “living persons” includes thinly disguised versions of living persons or living persons who are readily identifiable because of other characters or because of the factual, historical or geographic setting.
2. All releases must give the applicant the right to edit, modify, add to and/or delete material, juxtapose any part of the film with any other film, change the sequence of events or of any questions posed and/or answers, fictionalize persons or events including the release and to make any other changes in the film that the applicant deems appropriate. If the person is a minor, consent has to be legally binding.
3. If music is used, the applicant must obtain all necessary synchronization and performance licenses from composers or copyright proprietors. Licenses must also be obtained on prerecorded music.
4. Written agreements must exist between the applicant and creators, authors, writers, performers and any other persons providing material (including quotations from copyrighted works) or on-screen services.
5. Whether the production is factual or fictional, if distinctive locations, buildings, businesses, personal property or products are filmed, written releases must be secured.          

This is not necessary if non-distinctive background use is made of real property.

6. If the Production involves actual events, it should be ascertained that the author’s sources   are independent and primary (contemporaneous newspaper reports, court transcripts, interviews with witnesses, etc.) and not secondary (another author’s copyrighted work, autobiographies, copyrighted magazine articles, etc.).

If you have any questions, please speak to your entertainment insurance broker.