E&O Insurance for Film and TV: The Value of a Lawyer

Posted by Doran Chandler on Feb 20, 2012 5:34:00 PM

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

E&O Insurance: The Value of a Lawyer

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 (implied-in-fact). 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 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're threatened, 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.

Producers' Errors and Omissions Insurance  Learn More

Errors & Omissions Insurance


E&O Insurance 101 & How to Protect Your Film Project

E&O: What You Need to Know

E&O: Cost

Are you paying for the coverage you need?

Steps to Obtain

Producer Errors and Omissions

E&O: Reviewing Scripts

Distributor Errors and Omissions

Documentary E&O Insurance

Copyright Reports

How much of your film is copyright-able?

Copyright Infringements

Title Reports

Script Clearance Reports

Clearance Procedures

Claims Made vs. Occurrence

Fair Use

False Light Accusations

The value of a lawyer

Contact a clearance lawyer early to avoid problems on your shoot

To get or not get permission: The Social Network

A production lawyer's guide to obtaining E&O insurance and preventing litigation

Topics: Film Insurance, Entertainment Insurance, Film insurance broker, Film Producer's E&O Insurance, Directors & officers insurance, Film insurance premium

Directors and Officers Insurance for Film Production Companies

Posted by David Hamilton on Jan 30, 2010 12:54:00 PM



Small to medium sized privately owned film production companies face several of the same management exposures as larger corporations - yet many don't purchase directors and officers liability insurance. A simpler approach could change all of that.

There are several hundreds of production companies in Canada and it is clear they are important to Canada's economy. What's less clear is why so few of them buy management protection in the form of directors and officers (D&O) or Employment Practices (EPL) liability insurance. Several studies show that the take-up rate of management liability protection amongst production companies has been slow.

While Canadian data is scarce, a recent survey by Chubb Insurance found that 37% of U.S. companies do not purchase any type of management liability or professional liability insurance. In a survey of private companies, the majority of survey participants (63%) did not buy directors and officers liability or employment practices liability insurance. Based on our experience, the same trends likely apply in Canada.

Smaller privately owned companies may think their exposure to management liability risks is low or negligible, but that is not necessarily the case. In fact, another study by Chubb Insurance Company of Canada showed that private firms both here and south of the border are facing similar rates of lawsuits against their directors and officers, legal action involving general management liability and lawsuits from their customers.

In a survey released in September 2008, Chubb discovered that private companies in Canada and the U.S. faced similar lawsuits from customers (16%), competitors (5%), Vendors (6%) and partners or shareholders (3%) in the last five years. The average cost of the affected Canadian companies was $338,699. One-third of Canadian companies and almost a quarter of U.S. firms experienced an employment-practices related incident in the last five years. Judgments, settlements, fines and legal fees for such incidents cost affected companies an average of $63,724.

Based on our experience, there are numerous factors as to why film production companies tend to decline management liability protection. Many of the privately held film production companies we talk to say the application process is too cumbersome and the information requirements too broad. The second is that film production companies tend to perceive the price as too high.

Film production companies also tend to have fewer internal control mechanisms, such as human resources or compliance officers and company protocols, than larger suppliers.

Moreover, private held companies are likely to face short-term cash flow issues, which is reflected in relatively higher bankruptcy rates for small businesses.

The bottom line is the film production companies can, and do, face a number of liability issues related to directors and officers and employment practices. Executive and non-executive business owners are increasingly being held accountable for their actions.

We know of several distinct examples of privately held companies facing litigation related to bankruptcy, misrepresentation, wrongful dismissal and dissolution of a partnership. In one case, a retail company over expanded during a time of economic difficulty. Its revenues shrank, but inventory and supplies continued to grow. The result was bankruptcy. The company faced statutory liabilities and the directors were left exposed to pay for amounts owing 9including unpaid wages). The settlement amount came to $765,000 (including $165,000 for defence costs).

In Ontario, Bill 198 has also made it easier for shareholders to sue companies along with their directors and officers. In the last 18 months, the number of lawsuits has increased significantly as a result of this legislation.

It's clear there is a potentially significant coverage gap for many privately held companies in Canada when it comes to management liability. The main purpose of any new D&O or EPL insurance solution should help to protect these organizations.




Topics: Film insurance broker, Directors & officers insurance, Film Production Companies

You are a Director or an Officer, do you need D&O insurance?

Posted by Meghan Stickney on Apr 3, 2009 5:35:00 AM

Do You Need D&O Insurance?

The Canada Business Corporation Act and numerous statutes in each province impose many duties on the Company Director. The breach of any of these, if it leads to financial loss to the company or to the shareholders or others, can be grounds for an action for damages. There are further duties established by Common Law.

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It is not uncommon for many claims to be unjustified or unfounded; however, the costs associated with their investigation and defense are often substantial.

Allegations commonly made and which have to be defended by Directors:

  • Acting beyond the scope of their authority
  • Giving wrong or unprofessional advice
  • Breach of fiduciary duties
  • Failure to police the corporation or supervise subordinates properly. Anti-trust violations
  • Improper or excessive company spending
  • Unauthorized company borrowing
  • Conflict of interest

Remember, the above only need to be alleged for costs to be incurred.

D&O allegations are most likely to occur following:

  • Acquisitions/divestitures
  • Mergers
  • Foreign investment (especially in the USA)
  • Public offerings
  • Management buy-outs
  • Lack of growth, reduced dividends, improper handling of negotiations
  • Mismanagement or waste of corporate assets
  • Employee dismissal
  • Board room dispute
  • Breach of contract
  • Liquidation of the company
  • Change in ownership of the company's share capital

It is also worth remembering that Directors can be held liable for acts committed by other Directors, simply because they sit on the same board. Such damages can extend to the entire personal estate of the Director involved.

Directors' and Officers' Liability (D&O Insurance) is...

  1. Financial protection for personal assets of an individual Director or Officer.
  2. Reimbursement of claims paid by the organization for its Directors and Officers.
  3. Designed especially to meet the cost of:
  •  Defending claims
  •  Compensatory damages which the Director or Officer may be legally obligated to pay following a wrongful act arising out of his position within the organization

A D&O insurance policy should be a serious business consideration for your company.




Topics: Directors & officers insurance