subject: E & O Insurance And Independent Film Producers [print this page] Errors & Omissions Insurance (E & O) acts like a shield to help protect indie film producers from a lawsuits dealing with copyright infringement, using music without proper permission, chain of title issues and a lot of other lawsuits that can come up when distributing a movie.
Without E & O insurance most film distribution companies will not move forward with a deal to release a movie through retail outlets. It's a necessary cost of doing business with a majority of movie distributors, even in the indie feature direct-to-video market.
Some indie film producers secure E & O insurance before signing a contract. When they agree to a distribution agreement they submit a copy of the original certificate of insurance to the distributor adding the distribution company as an additional insured. Production companies that turn out movies on a regular basis usually have an E & O insurance policy in place before principal photography starts for any of their projects.
A good rule of thumb to remember is that indie films should have E & O insurance coverage not less than $1,000,000 for each claim and $3,000,000 aggregate for all claims with a policy deductible no greater than $10,000. A E & O insurance representative can explain the entire process based on your movie's unique elements.
Sometimes an indie film producer finds that the movie budget never figured in a hard cost for E & O insurance or that they even needed it to finalize a distribution deal to get their movie sold. When the offer comes in and it states that E & O insurance is required they do not have the extra money.
It's not the end of the world if you find yourself short on money to get E & O insurance. If a distributor is really hot for a movie they can front the cost through a carrier they deal with on a regular basis. The indie film producer will not have to go out of pocket upfront for the cost. But the distribution company will recoup the money spent from any sales, commonly referred to as a "charge back" to the indie film producer.
Don't expect the distribution company will get an indie film producer a discount or the best deal out there on E & O. It's like buying something on credit and paying a higher interest rate down the road. But if an indie film producer does not have the money then that's the cost of doing movie business. Having the distribution company front the E & O costs indie film producers will come out said indie film producers cut of the profits (no free lunches).
It's better for an indie film producer to look around for E & O insurance, get a solid quote, and include that hard cost into the movie budget before production starts. Making indie movies takes an economical approach. Save every nickel you can! This is indie filmmaker Sid Kali typing FADE TO BLACK.
by: Sid Kali.
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