Production Insurance by Pamela A. Schechter, Esq.

When you are given the chance to make an animated film or television series, it is a very exciting opportunity. But, it is a situation that can put an animator in legal jeopardy. Because of this risk, it is prudent for an animator to obtain production insurance. However, many of my clients have been unclear about the differences between the types of production insurance. To start the new year right, in this month's column I will try to clear up the confusion and describe the various insurance coverages that are applicable to animators.

Prior to the start of any animated work for television or film, a production company should obtain a package of production insurance. There are insurance companies and brokers that specialize in providing policies for the entertainment industry. It is wise to select these companies when purchasing the insurance for an animation project. These experts will be able to obtain the broadest amount of coverage at the most competitive rates.

Insurance packages for animated works usually consist of the following types of policies:

(1) Errors and Omissions Insurance-This insurance is also called E & O insurance. It protects the production company from legal liabilities such as libel, slander, copyright and trademark infringement. Once a production company is sued for any liability covered under the policy, the insurance company provides legal defense within the monetary limits of the coverage. The policies are usually last from one to four years and the premiums are in the range of $2,000 to $8,000 per year. On a side note, if any of my clients are working as independent contractors or employees on an animated production, I always demand they be named as an equal additional insured on the production company's errors and omissions insurance policy for the project. This is a clause that must be delineated in any employment agreement.

A production company must promise the insurance company that it has obtained the rights to use all of the elements in the film or television production. This promise is made in the application for errors and omissions insurance. The application is complicated and production companies usually need the advice of an entertainment attorney when filling it out. In order to render proper advice, the attorney must screen the final version of the production to be fully informed in order to help complete the insurance forms. In some cases, the attorney is required to sign the insurance form acknowledging that his client has complied with the clearance requirements for the production elements.

(2) Film or Videotape Negative Insurance-This policy insures the film or videotape negatives or any other original elements of the production from any damage. If any of the elements are damaged, they are covered for the amount up to the total of the production budget.

(3) Faulty Camera, Raw Stock and Processing-If there is any camera malfunction, defective film or videotape, or damage caused by the lab during the processing of the elements, this insurance policy will cover the cost to the production company of repairing or reshooting the film or video.

(4) Equipment Insurance-This insurance policy covers any damage to equipment owned or rented by the production company.

(5) Disability Benefits-Many states require employers to provide disability benefits for workers whose injuries occur while on the job. The amount and type of benefits vary from state to state and this insurance package covers the production company if it has to provide disability benefits to an employee.

(6) Workmen? Compensation-This policy provides coverage to the production company when it has to provide workmen? compensation to an employee. Like disability benefits, this coverage is for any injuries that occur to an employee while performing his job.

Independent contractors working for a production company might qualify for both workmen? compensation and disability benefits.

There are many other types of insurance policies that can be obtained by an animation production company. However, the coverages listed above are the policies that most companies obtain. The best time to consult with an insurance company or broker that specializes in the entertainment industry is at the beginning of the production process. It is at this time that the production company should also obtain the advice of an entertainment attorney about procuring production insurance.