Insurance on films and commercials is critical as it protects productions from potential losses that may occur.
Ken Cubberley of Johannesburg-based Film and Media Adjusters, which specialises in the film and entertainment industry, says: “Feature film budgets today can reach figures of $200m plus, while daily budgets for commercials can comprise anything from R25 000 to R1.5m. Therefore production companies need to be covered in the event of an incident that may result in a fairly substantial expense – such as a re-shoot, additional post-production costs or abandonment – it all depends on the event.’
Under the Film Producers Indemnity Policy (FPI Policy) the items insured depend on the needs of the production. “The FPI Policy covers cast sickness and injury and a medical examination is a pre-requisite. It also covers film negative which includes “the faulty perils’, such as defective cameras, processing and raw stock,’ explains Cubberley.
Other insurable items include props, sets and wardrobe and extra expenses arising from the inability to perform due to loss of property and / or facilities (eg. a road that is washed away preventing the production team from getting to set).
The cover of miscellaneous equipment also falls under the FPI Policy. Says Cubberley: “This covers the production house for its responsibility to the rental house, should loss or damage occur to hired equipment while in their care, custody and control.
“With FPI cover the production company can also request, apart from its direct actual expenditure incurred, additional cover – a mark-up which the majority of insurers accede to. This is usually between 10 and 12%.’
However, the FPI Policy does not cover human error and does not guarantee the ability of crew to perform within the normal specifications of the industry.
Cubberley explains how the claim process works: “When a production house sustains an incident of loss that is insured under the FPI Policy, they notify their broker or insurer. The insurance company or underwriter appoints an independent loss adjuster to investigate the overall circumstances. If he is satisfied that the incident of loss represents a peril insured, he requests the insured to formulate a claim. The adjuster, upon receipt of the claim formulation, proceeds to adjust the quantum. Then a report is issued and settlement is recommended to the insurer or underwriter.’
The most common losses on commercial productions relate to weather day interruption but it is far more expensive than the FPI.
Cubberley says that claims range from veld fires, wind havoc, external sets and theft of equipment to cast claims and sickness. “Our climate conditions can sometimes involve unusual circumstances. For example, recently a camera malfunction occurred due to the degree of static electricity in the atmosphere at that specific geographic location and time of year.’
The ratio of insurance remains constant to the value of the production unless the production warrants a once-off rating due to the possibility of a higher risk and loss – such as filming in the Polar region.
