Entertainment insurance is a collection of policies tailored for businesses in the entertainment sector. It is also known as production insurance or film insurance. The US entertainment industry is a huge market worth almost $717 billion according to Select USA. It stands at the peak of the world, representing nearly a third of the global M&E industry.
As the market is booming, businesses have to deal with enormous risks that can put them out of the market. To obtain protection against such exposures, entertainment insurance plays a vital role.
In this article
What is Entertainment Insurance?
Entertainment insurance is for businesses, especially in film production, that are prone to uncountable risks and exposures. These exposures often include lawsuits against cases of copyright infringement, staff injuries, and other third-party claims. Not to mention the severity of risks that come from their wide range of equipment on and off set.
This insurance, also referred to as production insurance, is a collection of policies designed for businesses in the entertainment sector. That is to say, these policies provide coverages against losses to producers, equipment, crew, and other exposures related to post-production.
These risks can bring financial harm to their business. Moreover, not only limited to production firms, any business in the media and entertainment sector need protection against similar risks. Purchasing a insurance policy can protect your business’s smooth performance and safeguard you against catastrophic risks.
Who needs entertainment and film insurance?
With the exponential growth in the entertainment industry, commercial companies operating in the entertainment industry are exposed to more risks. The industry itself encompasses a broad spectrum of businesses as well as professions. From circus owners to film production companies, entertainment venues to animation studios—the risks faced by this industry can vary widely.
Some of the businesses and professions who need entertainment insurance for risk management are:
- Film producers and directors
- Rental businesses for equipment (camera, props, sound, wardrobe, and others)
- Entertainment halls like theaters and concert venues
- Post-production agencies for audio, film, and video
- Entertainers and performers like musicians, comedians, magicians, and clowns
- Videographers and photographers
As the market is very vast, the risks associated with different sub-sectors are distinct. Hence, production insurance is customizable according to your business’s risks, giving you full protection against them. In addition, film producers can look for film production insurance that would provide more specialized coverage for their business.
Types of entertainment insurance coverage:
The entertainment industry is a diverse market with different subsectors. Subsequently, each subsector faces unique risks and require customized coverage. So, you can obtain an insurance policy tailored to your business needs.
We’ve put down a list of insurance products for you. The insurance policies that fall under this insurance package are:
General liability insurance
General liability insurance provides coverage to production companies from losses that arise due to third-party claims, which include bodily injuries, property damage, and harm towards reputation. With the growing public concern for privacy violations, companies with online content subscription services today face some serious litigations.
Film production companies are more likely to face lawsuits related to libel and reputational damage. For instance, in 2015, Paramount Pictures faced a defamation lawsuit against former Stratton Oakmont general counsel. The defamation lawsuit was over the movie Wolf of Wall Street, according to Hollywood Reporter. This was not the first libel lawsuit for the Oscar-nominated movie.
General liability coverage also covers advertising damage like copyright infringement and defamation, which are significant risks for entertainment businesses.
Commercial property insurance
Commercial property insurance protects your business’s assets and structure like furniture, equipment, and fixtures from covered events. These events mostly include damage caused by fire, theft, vandalism, hail, and windstorms.
Purchasing a business owner’s policy (BOP) would provide broader coverage with a lower cost if you’re looking for options that go easy on your pocket. Moreover, a BOP combines coverage like general liability and commercial property, which is more convenient to look after for small businesses.
Workers' compensation insurance
Workers’ compensation insurance protects your employees from injuries that occur in the workplace. In the production business, employees on set must do physical tasks that are prone to risks. This policy covers all the medical expenses, disability benefits, as well as loss of wages due to any employee injury in the place of work.
All states (with Texas as an exception) mandate businesses to carry a workers’ compensation policy. In case production companies change location frequently, they should check the state’s requirement for workers’ compensation for compliance measures.
Production companies also deal with independent contractors, but they have an exemption from workers’ compensation. Likewise, independent performers can purchase an entertainer’s insurance policy from liability claims that may arise from their professional work.
Commercial auto insurance
Entertainment companies usually own vehicles for operations such as delivering equipment, visiting location sets, and transporting people. Commercial auto insurance covers business owned vehicle damages in the event of an accident, or through other means like vandalism or natural calamities. It also includes third-party liabilities if your employees are at fault. So, you can select a broader plan with collision and comprehensive coverages for your business.
Employment practices liability
Entertainment businesses usually function in a complicated business environment. Exposures related to claims such as sexual harassment, wrongful termination, and discrimination arise frequently. Employment practices liability insurance provides preventive measures from these types of lawsuits and helps reduce the impact on your business.
For instance, according to a news article posted by Wired, two former employees of Sony Pictures Entertainment filed a lawsuit against the heavyweight for their failure to secure confidential employee data. Sony ended up losing the lawsuit and agreed to pay $8 million for the incurred losses.
Likewise, employees can also sue employers on the basis of wrongful termination. As per a Deadline news report, Debbie Klien, a former senior agent of Paradigm Talent Agency files a $2 million lawsuit. Her claim was against the company for wrongful termination amidst the crisis of the coronavirus.
Therefore, you need employment practice liability insurance to safeguard your business from such claims.
Media liability insurance
Media liability insurance is a specialized form of professional liability insurance that safeguards entertainment businesses. This insurance protects businesses against lawsuits based on the end-product/service provided. The coverage includes common claims such as:
- Copyright violations
- Privacy invasion
- Unauthorized use of trademark and materials
- Breach of contract, license agreement or product placement agreement
- Libel and Slander
Furthermore, this policy includes broad coverage for media companies that frequently deal with the creation and dissemination of content. Film production companies – be it small-time indie movies or Hollywood blockbusters, need media liability insurance to protect their business from substantial losses. For example, according to news reported by NBC News, in 2018, Bobby Brown sued Showtime and BBC for $2 million. The case was filed for overusing improperly using the footage in the documentary “Whitney: Can I Be Me”.
Hence, advertising companies handling campaigns for their clients are always at risk as they distribute content on a massive scale. So, having a media liability insurance for such firms is a must.
Cyber liability insurance
For a competitive market like the entertainment sector, cyber-attacks are fatal risks that can completely disrupt the course of business. Above all, companies store a lot of sensitive data from their clients and employees, which are prone to unauthorized data.
For instance, all media businesses can learn a lesson from Sony Pictures for the massive hack which led to a loss of $100 million. Reuters states that Sony had cyber liability insurance to cover most of the incurred expenses.
With the increasing trend of data breaches against consumer’s privacy, media and entertainment businesses must prepare for cyber-attacks that can put them out of business. Consequently, the repercussions from a cyberattack hit hard for businesses of all sizes.
According to The WSJ survey, the top 25 populous cities in America are opting for purchasing cyber insurance. Therefore, cyber liability insurance protects businesses with the expenses for restoring lost data, ransom demands, and other financial damage caused by cyberattacks.
Entertainers and performers insurance
Unlike most of the coverages mentioned above, entertainers/performers insurance is a policy for independent performers and not companies. Performers insurance is a type of errors and omissions insurance that offers liability protection for independent performs for claims that arise from their operations.
Performers can be of various backgrounds. Entertainer’s insurance is required for performing professions such as clowns, comedians, dancers, actors, musicians, magicians, and more.
Employer’s coverage does not cover entertainers who perform independently. Therefore, they have to purchase an entertainer’s insurance policy to protect themselves from financial losses.
The same goes for independent cameraman and videographers. They, therefore, need to purchase a photography insurance policy to protect their business.
Video and film production insurance
Video and film production insurance is a package that protects potential losses arising from filming and liabilities related to it. Most video and film insurance policies cover:
- Damage to camera and equipment
- Costs for re-shoots in case of damage
- Props and wardrobe
- Liability on different locations and more.
As all the film projects are different, a good film insurance policy should be customizable as per the production company’s needs and risks. For instance, if the shoot requires dealing with the construction of new sets and locations, you need to consider selecting the builders risk insurance with the package.
Similarly, if your company is hosting an event like a post-release party, you need to add an event insurance policy to ensure coverage for your event.
Companies buy film and video production insurance annually or as short-term policies. Short-term production insurance provides coverage on a project-by-project basis and can cover one-day production as well. Therefore, if you run a production company that does multiple shoots throughout the year, we recommend purchasing an annual policy.
Additional policies for you or your business
Directors and officers insurance
Small to medium-sized production companies often experience similar management exposures like large corporations. As a result, they can face several liability issues for directors and officers level staff. So, purchasing a directors and officers insurance offers financial protection to directors and officers. Moreover, the insurance package protects the company in the event of a lawsuit for their performance and duties.
Directors and officers insurance can usually include employment practices liability and fiduciary liability insurance as well. Fiduciary liability insurance protects your business against liabilities for managing as well as administering employee benefits plans.
Commercial umbrella insurance
Usually, larger entertainment firms have a massive scope of exposures in the industry. Primary policies might not be adequate to cover for such huge exposures of risk. So, production companies can purchase an umbrella and excess liability insurance to increase the limits for their primary policies.
Commercial umbrella insurance will offer added protection with different coverages that your primary policies exclude. On the other hand, an excess policy does not provide broader coverage. It only acts to supplement the existing coverage of your underlying policies.
Inland marine insurance
Production companies travel with expensive production equipment, cameras, gears, stands, and other sensitive equipment for filming purposes. Inland marine insurance assures protection towards these assets while they are on transit for business-related purposes.
Consequently, this policy will bear the expense of repairing or replacing the insured equipment in mobile transport accidents.
Ocean marine insurance
Ocean marine insurance is a collection of policies that protects equipment, goods, materials, passengers, and crews during marine transport for domestic and abroad lands.
Film production companies that have to travel a lot with all the equipment for changing sets require ocean marine insurance to protect their business during cargo transport.
Standard exclusions you need to consider
The scope for the risks in the entertainment industry is vast. Standard policies do not cover for high risks activities unless you purchase add-ons to your plan.
Some of the standard exclusions for production insurance involves:
- Stunts and pyrotechnics
- Aircraft insurance
- Using commercial drones for filming
- Filming underwater
- Involving with animals
Standard entertainment insurance policy will not provide coverage if you are using drones or aircraft for filming purposes. Consequently, you will need to include a commercial drone insurance and aircraft insurance to ensure full protection.
How much does entertainment insurance cost?
Entertainment insurance costs are different according to the types of business and their exposures. As companies working in this sector have distinct risks, insurance costs can hugely differ. Any insurance company considers factors that affect the cost of insurance such as:
Nature of projects:
The cost of insurance increases when your business deals with high level of exposures that require more insurance coverages.
Industry experts know the prevalent risks and therefore, are less prone to them. So, the cost of premiums is low as their expertise can deal with market risks better.
Value of equipment:
Companies with valuable equipment require more insurance coverage to protect them in case they incur damages.
Number of Employees:
Companies with more employees face higher risks of injuries, negligence, and lawsuits. Therefore, the cost of insurance will be high if your crew has more employees.
Similarly, having a clean claims history indicates a good risk behavior and will result to lesser insurance cost.