Insurance policies are legally binding contracts with conditions, terms and special promises that both an insurance company and policyholder agree to. Insurance policies describe in detail what types of risks are covered and which are not.
Using an example of a typical production company insurance transaction, here’s how the process works:
Application – The filmmaker or film industry entrepreneur will get in contact with Film Casualty or another broker of insurance to learn about the various coverages available to cover the risks of their productions and businesses. Often this process involves determining a price indication of what coverage will likely cost. The business owner or executive then fills out an application that is sent to an insurance underwriter.
Underwriting – When an application goes into the underwriting process, an insurance company determines if a customer's request for coverage will be accepted. Underwriters often consider the insurance agents recommendation, the amount of coverage being requested and the loss history of the applicant against statistical models that determine risk. Insurance companies will then accept, deny or request modifications that could include larger deductibles, different coverage types or make changes to the typical policy to fit the risk profile of the business applying.
Issuing a Policy — When a policy has been approved by both parties (the insurer and the insured), it is then sent to the policyholder who then becomes known contractually as an “insured”. The policy will included a “declarations page” with will provide an overview and information about the specific exposure coverages that are provided. The policy will also have legal language describing an insuring agreement, modifications or exclusions of coverage for specific property or events. It’s important that a policyholder read the policy in full to be sure that all of the coverage requested is provided. Reading the policy to make sure industry safety and trade association insurance minimums for filmmakers meet industry standards is crucial.
Claims – Good news, most filmmakers who hold policies do not suffer losses that result in the need to submit claims. Losses are always incredibly disruptive to business operations. Depending on the type of loss involved, claims are filed. There are a few different types:
Property Claims: When a loss occurs, the policyholder will call their agency or the insurance carrier directly and report the loss. At that point, a claims adjuster will look into and investigate the loss and verify the insured's coverage for the particular risk that was involved in the loss. Adjusters will then create a repair or replacement estimate.
Liability Claims: When a third party makes a claim against an insured alleging that the insurance holder is responsible for damages and losses, an insurance company claims adjuster will confirm that the incident took place, verify the insurance coverage, review and interview the claimant, the policyholder, as well as a healthcare provider in the event of a bodily injury claim, to determine the amount and extent of damages and the negligence involved in the claim arising.
Claims that involve liability loss costs are usually separated into two categories: economic damages that can include out-of-pocket expenses and lost wages and non-economic costs which can include compensation for pain and suffering. Insurance claims adjusters have the responsibility to find and offer a fair settlement to injured parties. Once an insurance company and the and the claimant agree on the amount of the loss, the insurance company will pay that amount. In the event that there is a disagreement over a claim settlement, the issue will often go to arbitration, mediation or to the court system for a resolution.
Renewal — Insurance policies for organizations usually run for 12 months. However, there is an obvious exception for short-term film productions that usually involve films, pilots, film series and student films. However, most 12 month policies renew at the end of a coverage period.
Insured companies can decided if they’d like the cancel their insurance policy or move to a different insurer at the end of their policy period. Insurers can cancel a policy during the term of a policy for non-payments. Most State laws place strict regulations on insurance companies ability to cancel or non-renew policies. In any case that there is a nonrenewal advance notice is sent to the policyholder.
In all, the process of securing insurance protections for filmmakers follows a similar trajectory as all property and casualty insurance purchases. However, the film industry often has specific requirements for insurance compliance around the issuing of Certificates of Insurance to State and City governments, rental companies and third-party vendors. As well, the film industry has a large appetite for completion bonds and surplus lines coverages for difficult to insure productions. As such, many film entrepreneurs find the process of securing and servicing their insurance production with a specialty brokers to save them time, while also contributing to the film community.