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Looks like a recent parody web video didn’t have producers errors & omissions insurance. A music video director by the name of Joseph Kahn posted a 14-minute Power Rangers parody on YouTube and it quickly went viral, garnering 1.4 million views.
All is not well, however, as Kahn says he is being harassed by the owners of Power Rangers to take the video down because they say he is willfully engaging in copyright infringement. This is what producers errors & omissions insurance is for.
When you embark on a parody production you are immediately on shaky grounds in terms of copyright infringement. If, however, Mr. Kahn had purchased producer’s errors & omissions insurance, the in-house legal counsel would have run title clearance to make sure that he was not doing what he is currently being accused of.
In short, it likely would have been impossible for him to get insurance had he disclosed that he was using the intellectual property of Power Rangers without written consent. If this is true and he wasn’t able to get insurance, then he would be financially responsible for any court-ordered restitution he is ordered to pay to the IP holders. All hope is not lost, however.
Legal experts are saying there is a gray area where fan fiction is concerned. Usually it’s done by a little guy with not a heck of a lot of scratch and is a judge really going to side with a billion dollar studio over “Fred from his parent’s basement?” Doubtful. In any case, if purchased, producer’s errors & omissions insurance will cover court costs and settlements where the copyright infringement was proven unintentional. Having said this, it is important for content creators to do their own due diligence.
Otherwise, not even the Power Rangers will be able to save them once the blank hits the fan. The fan of Power Rangers.
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.
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.
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 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.
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.
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.
Claims Made vs. Occurrence
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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:
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.
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A broker will help identify the risks associated with a production. Once the risks are identified, the risk can be transferred to an insurance company for a fee or premium. The film insurance broker negotiates the lowest possible premium and the broadest coverage available in the market place. In Canada, there are four film insurance companies: Chubb, Fireman’s Fund, Premiere and Travelers. Front Row is able to provide you with a quote from each of these companies in an easy to understand comparison format.
Unlike insurance agents - who work for the insurance company - Insurance Brokers work for the client. Insurance brokers are recognized by law as experts in insurance. Insurance Brokers in Canada must pass a series of exams in order to be licensed and there is annual continuing education to maintain a license. Make sure your broker is licensed in the province that you are shooting your production or the production could be fined or subject to a surtax.
Insurance Brokers owe a higher duty of care to their clients than an Insurance Agent. Brokers represent the interests of their clients, not the insurance companies. They offer professional advice in arranging insurance on behalf of their clients.
Since insurance brokers are considered under the law as professionals, they are responsible for their actions and can be sued for professional negligence if their advice is deemed to be faulty. All licensed brokers therefore need to carry professional Errors and Omissions coverage. You should ask your broker the limit of E&O insurance that they cover: $1,000,000 may not be enough once defense costs are deducted from the limit.
The many roles of a broker include:
It is important to deal with a broker that understands the specific language shown on Film Production Policies. For this reason, it is strongly suggested that you seek out a specialized Film Insurance Broker when you need insurance for your production.
Related post: How to choose the right film insurance broker
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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.
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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.
The value of a lawyer
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If you are a US Insurance Broker that has a client with a Canadian subsidiary, Canadian tax law requires that:
A US Insurance Broker that does not hold a license in Canada will not be able to place business with a Canadian insurance company. Furthermore a US broker that does not hold a Canadian license is not allowed to provide insurance advice to a Canadian company – even if it is a subsidiary of a US parent company. To do so will incur a premium tax and penalties that are payable by the subsidiary.
A broker licensed and domiciled in Canada will make sure that your client complies with all insurance regulations so that the policy will respond when required. A Canadian Entertainment Insurance Broker will also ensure that the premiums qualify for any applicable tax credits.
This article explains the law well and in detail l and that the CRA (the equivalent of your IRS) is being stricter about enforcing it- https://www.canadianunderwriter.ca/features/excise-tax-extends-its-reach/.
At Front Row, we would be happy to assist you insure your subsidiaries in Canada.
Please contact David Hamilton: 604-684-3456 or e-mail email@example.com
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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 TV production. Production financing will usually not flow until E&O coverage is in force.
A producer will need to complete an application (contact firstname.lastname@example.org for 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 straightforward 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 producers and production companies with their production insurance questions - please contact us today!
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