E&O: WHAT FILMMAKERS NEED TO KNOW
As a filmmaker your top priority is likely bringing your next production to life and maintaining creative inspiration, but you also know how important the business side of film production is.
This includes understanding the legal and insurance requirements needed to protect your next film. Insurance is a critical part of the film business, especially E&O (Errors and Omissions). If you understand what E&O is and how it can actually serve your production needs, you’ll set your next film up for even greater success.
GETTING TO KNOW E&O
Producers Errors and Omissions Insurance covers all of the potential legal liabilities and defense costs against lawsuits alleging unauthorized use of titles, formats, ideas, characters, plots, plagiarism, unfair competition or privacy, and breach of contract. It also protects against alleged libel, slander, defamation of character or invasion of privacy. Errors & Omissions is a requirement for distribution deals with studios, television, cable networks, DVD and Internet sites prior to the release of any film production. In fact, if you haven’t released a film yet, you’ll discover that production financing will probably not flow until your E&O coverage is in force.
HOW IT WORKS
Consider the risks: You’ve released a film that is a HUGE success, and someone accuses you of stealing their idea, or script. No surprise, this happens a lot. For example, after Avatar was released in 2009, a man spoke out and claimed that he had actually pitched this multi-award winning movie to James Cameron a few years earlier. An E&O policy would provide a lawyer in this instance and would pay the legal fees and judgement costs if the filmmaker lost.
Planning an online production? YouTube is a hot bed for E&O disputes. A while back, a music video director posted a parody of a well known movie that went viral, garnering over 1 million views, but unfortunately he didn’t have E&O and the video was taken down as he could not afford the legal costs. A big loss for him and one he could have avoided if he had obtained E&O coverage.
WHAT E&O COSTS
Premiums for E&O vary based on the content of the production. A straight forward documentary typically cost $2,500 to $4,000 while you can expect to pay $3,500 to $8,000 for a feature film for the industry standard 3-5 year policy term. Every project is unique and requires a custom E&O policy. Standard limits are $1,000,000 per claim/$3,000,000 aggregate with a deductible of $10,000. Ideally, speak to an E&O insurance expert who can advise on the risks related to your particular film. We’d love to help with that.
YOUR NEXT STEPS
- The first thing an insurance provider will ask you is: Do you have “Title and script Clearance”? This is a way to discover if you’ve done your legal due diligence to make sure you aren’t engaging in copyright infringement and that you have the right to use the story and title. As you set out to obtain E&O, as a filmmaker you must begin clearance work prior to principal photography, continue during filming and complete it at final cut. Note: It can take up to 10 working days for a project to be cleared and coverage to be in place so you’ll want to start the E&O process early to ensure that your cash flow is not impacted.
- Once obtained, be sure to check your production/distribution/financing agreements regarding the start date for your coverage, as some financiers require Errors & Omissions coverage to be in place for the first day of production before they will provide the first cheque that allows you to start production.
- Your 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, enjoy peace of mind knowing you’ve got the right coverage in place.
About the contributor: David Hamilton is President + CEO of Front Row Insurance, one of the world’s largest entertainment insurance brokers. Front Row offers E&O insurance for filmmakers. E&O Policies start at $1,250 and certificates proving insurance coverage are provided immediately at no cost.