Film Production Insurance - Why you need it, When you need it, and What it costs
Updated: Nov 7
Entertainment lawyer, Lindsay Spiller, interviewed Higgenbotham's Marc Spivey, a leading entertainment insurance broker. The interview took place during the American Film Market (AFM) on November 2, 2022, in Santa Monica, California.
Marc Spivey is Executive Vice President of TV/Film & Entertainment at Higgenbotham, an international insurance broker (email: firstname.lastname@example.org; tel: 310.245.0048)
My name is Mark Spivey and I'm an entertainment insurance broker and I'm sitting right now in Santa Monica at the American Film Market and this is a a place where foreign buyers come to buy the rights to distribute American Independent films. It's a very popular and bustling film market that's held annually here in Santa Monica and I'm here to network with clients and to see old friends.
Tell us a little bit about you where you grew up how and how you got in the business.
I grew up in Southern California and I've been an entertainment insurance broker for close to four decades. This is my area of specialty and more specifically I specialize in Film Production and television. I arrange and place insurance for projects that shoot all over the world and all sizes and all different types of Productions.
So what kinds of insurance are involved in Film Production?
You have two primary exposures when it comes to Film Production: you have the exposures that relate to the actual shooting of the film and then you also have the exposure of your final content.
During principal photography there are several policies that you will absolutely need in order to shoot your film. There's general liability. There's automobile coverage. There's an entertainment production package policy which is designed to address all of your property exposures related to filming. That is your equipment, your prop, sets, wardrobe, your locations, and it can even include things like your cast Insurance.
Cast insurance is intended to protect the production company if a principal cast member is injured or falls ill and you're incurring additional expense until they can return to the camera or be replaced.
There are other coverages it could you know if you have stunts or you have watercraft, aircraft, drones, pyrotechnics, animals, any of that stuff is also part of physical production and may need treatment with different Insurance products.
Post-production - typically you keep your coverage until you deliver your finished production and so the coverage is available to protect you and the digital content or actual film, if you're still shooting on film, and the insurance will protect for the overhead costs to reshoot that until your final delivery or protect protection print of your finished product.
So the second part of your exposure that is related to your production are claims that can arise out of content. So that would be copyright infringement, invasion of privacy, libel and slander, unauthorized use of likeness, or title --- you know --- you used my image without my permission, you slandered my name, you stole my idea, and all of those types of exposures are covered under what's called a media liability errors and omissions policy. Typically you don't secure that until you're ready to distribute your product. You may need to get it earlier if there's a completion bond or some other financing that's requiring it before you actually shoot but it's a whole separate underwriting process and it requires you to follow certain clearance procedures and is an essential and vital part of the overall insurance program for filmmaking.
The biggest mistake most new filmmakers make is that they're typically trying to get a production done on a very lean budget and they may have favors for equipment they may have favors for actors. The thing that they need to understand is that you can't get a favor for the insurance the insurance. It is a set cost particularly on the smaller productions. There's no leeway for negotiation on on rates so there's a minimal buy-in and they really need to factor in to their budget the insurance cost estimates when they're putting their budget together.
It's critical that they really use an insurance broker that specializes in this area because traditional insurance brokers are somewhat generalists in business and they don't have the understanding and are not familiar with the nuances of ensuring Film Production. They probably don't even know where to go to get it. So it's really important that you develop a relationship with an entertainment insurance broker who is familiar with the process and can help you understand the coverages and provide you with a quote and discuss possible options for coverage.
What is the range of costs associated with obtaining insurance?
I'll actually give you kind of a of a of a reference point for both. For doing your physical production, the insurance cost --- even for just a small no budget shoot of say three or four days ----you're still going to have to cover yourself adequately and properly and you'll need to pull permits and you'll need to provide Insurance to equipment vendors and you have work comp and crew and you're renting vehicles, etc., you're looking at anywhere between three and five thousand dollars minimum for all of those coverages. So you need to understand that once your budget gets up into an area where you've overcome absolute minimum premiums to just turn on coverage, then you can plug in to your budget. Let's say you're doing a two and a half million dollar film, then you should use somewhere between one and a half to two percent of your total budget for insurance. There should be line items in for for your insurance errors and omissions Insurance. The absolute Rock Bottom price for a policy right now which would provide you with a three million aggregate limit, one million per occurrence and probably 25,000 retention is probably around thirty-five hundred dollars.
The factors that impact cost on E&O are: your budget size, your content matter, whether it's controversial subject matter or animation and things that draw claims. There's going to be more underwriting and the rates might be higher. The limits of coverage that you need sometimes will change --- the distributor might want you to have a five million dollar limit instead of a three million dollar limit --- that's going to raise the cost. The other thing is how ultimately your product is going to be disseminated. If you have a theatrical released film, then that immediately means that you're more at risk of drawing claims because people will see that as someone that might have Deep Pockets and they might try to get money out of you so. There's a variety of different factors. So you can start at 3,500 it could go up to over twenty thousand dollars. There's a clear underwriting process for errors and emissions insurance and when you need errors and omissions insurance, you'll have to complete that application yourself and it comes with a one or two page list of the clearance procedures that you're compelled to follow in order to be cleared and approved for insurance.
For those who don't understand the way Insurance works could you explain what an underwriter is and what they do?
So I'm a broker which means that I'm your Advocate but I'm also the liaison with the insurance company. The insurance company employees that I go to are called underwriters and they're whom I communicate with and they're ultimately the ones that will either accept or decline, or ultimately quote something for you. They're looking at information. The more information I can give them on your behalf the better I can advocate on your position and elevate the underwriters' comfort level. Invariably they may come back with more questions about a production but ultimately they're the ones that are providing the terms and the limits and the premium.
Without sounding funny, is the broker basically the filmmaker's friend then because the broker is the intermediary that can help them, right?
Your broker should be someone that you know you can trust and is advocating for you on your behalf. And always remember that the broker is always on your side, and the more forthright you can be with him the better position he is in to do what he needs to do for you which is to get you as much coverage or the best coverage of the best price available in the marketplace. Ultimately the broker provides a service role to you because when you're making a film there's all kinds of things that can happen --- you may need certificates of insurance, you may need requirements and contracts looked at to make sure that the insurance is meeting those needs and and then, in any of claims if claims come up, you need to understand how to how to manage that --- so the broker's role is to be your advocate and you should feel comfortable with him. Developing a long-standing relationship with him is good because you always know where to go to if you need something now.
There's always this misunderstanding about the fair use doctrine when it comes to E&O insurance but it's a murky area isn't it and it sometimes it requires a lawyer's opinion letter, right?
Absolutely! That's why you need someone like Lindsay to help you with these things because there are certain nuances with what you can use without getting rights approved. There's some stuff that is fair use. The E&O insurance application asks these very specific questions and one of the questions the application asks is are you who are you using for your legal clearance procedures so that's why it's really important that you you do have an entertainment attorney who's familiar with copyright law and can help you manage those things that you need to be doing. The worst thing you can do is to make something and you've overlooked these things or you want this production and you didn't get the clearance for music or the rights to use some footage and now you're going to have to go back and and retool your whole project because you don't have the rights and you're never going to be able to distribute it and and you're never going to be able to get insurance for it.
When in the process should producers start reaching out and putting their insurance team together?
Insurance is should be in the discussion before you ever go into pre-production. You need to understand what your needs are and make sure that you have the insurance because ultimately when you go into pre-production you're going to need to provide certificates of insurance to procure equipment, secure location permits, rent vehicles, and cover your crew for workers' comp.
If somebody wanted to reach out to you, how could they reach you?
Well I can provide you with my email address which is M Spivey, that's m-s-p-i-v-e-y, and the name of my company, Higginbotham, that's h-i-g-g-i-n-b-o-t-h-a-m.com, or you can even call me on my cell which is 310-245-0048. I'm happy to answer any questions that you might have about insurance.
Thank you, Mark. This is a great interview.
Lindsay, thank you so much. I really appreciate it.
Spiller Law is a San Francisco business and entertainment law firm. Feel free to arrange a free consultation by resorting to the Schedule Appointment link on our website. For other questions, feel free to call our offices at 415-991-7298.
The information provided in this article is for general informational purposes only and should not be construed as legal advice or opinion. Readers are advised to consult with their own legal counsel for specific advice.