Thanks to the Internet, Everyone Has Seen your Movie.
Your intrepid film managed to weather the entire production process without any hiccups—bravo! Now that the theatrical run is over, it’s time to bequeath the film to posterity in the form of home video and TV rebroadcasts. Safe enough, right?
In fact, the “tail” of a movie’s lifespan is no less exposed to potential claims than any other phase. As the film is released to home video and dissected on the internet, every scene and every word of dialogue will be scrutinized. As more sets of eyes see your film, the likelihood of a nuisance lawsuit unfortunately increases. For example:
Unauthorized use of logos can elicit legal action from the corporations that own them
Inclusion of identifiable faces in crowd scenes can prompt legal action
Misappropriation of name or likeness can cause a lawsuit to be brought
Multimedia risk insurance (or “Producer’s Errors & Omissions [‘E&O’] Coverage) offers protection against these kinds of lawsuits, including alleged unauthorized use of titles, formats, ideas, characters, plots, plagiarism, unfair competition or privacy, and breach of contract. Distributors normally require that this coverage be in place prior to distribution simply because of the myriad of unpredictable risks a film can face in the distribution phase.
As a filmmaker, you want to be able to focus on doing just that—making films. Wouldn’t you like to rest easy once you’re finished? Ensure your production is protected from the idea phase to the home video phase so you can concentrate on what you do best.
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?
I.e, The script of your movie/show is slightly similar to another production, therefore a claim for plagiarism could arise.
Covers the insured against defamation, libel and slander suits.
Covers against intellectual property rights.
Typically most distributors and broadcasters will not distribute or air any production without it.
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.
WHAT CAN AFFECT THE COST OF AN E&O POLICY?
Whether an attorney’s services were used to secure clearances and licenses
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:
Dates of Filming
Copy of Budget Top Sheet
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.
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:
Negotiate with the insurance companies on behalf of clients. There are four insurance companies in Canada: an Insurance broker must be familiar with what these companies offer so that the best price and coverage is procured for the producer.
Brokers facilitate claims - Because the broker works on behalf of the client, it is their duty to ensure that insurance companies pay the full amount of the claim that the client is entitled to.
The broker acts as a conduit for communication between the insurance company and the client. This includes providing certificates for banks, bonding companies and locations to evidence coverage allowing banks to release funds to the client, locations to be locked by the location manager and equipment to be rented.
Advise clients on ways to limit potential liabilities during production.
Review scope of the client's existing insurance policies to reveal gaps or deficiencies in the coverage.
Comprehensive examination of the clients production to assess the amount and type of insurance required. A broker will also help the client understand what coverage they have and do not have and they can explain any limits to the coverage.
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.
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 COVERS THE PRODUCTION CO. AGAINST LAWSUITS ALLEGING UNAUTHORIZED USE.
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.
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!
Proper film E&O insurance clearances for your film will result in the best possible coverage and cost for your producers E&O insurance policy - otherwise known as multimedia E&O.
If the Production involves actual events, it should be ascertained that the author’s sourcesare 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.).
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.
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.
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.
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.
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.
Otherwise known as Producers Errors and Omissions Insurance, Multimedia Risk 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 prior to the release of any theatrical or television production.
If coverage is required for the title, you must obtain a ‘Title Report & Opinion' from a recognised Film Title Clearance Company offering this service and submit the report to underwriters for final approval.
Premium indications prior to actual quotes when coverage is offered can vary; However a straight forward documentary would cost $5,000 and $7,000 for a feature film.
Upon instructions from the Production Company, the broker will begin clearance procedures where the attorney for the underwriter will review and approve your lawyers clear the project - there is a fee for this service which is included in the final premium. If coverage is not bound, the fee is payable to the attorney for the underwriter 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.
It can take up to ten (10) working days for a project to be cleared and coverage to be in place.