TYPES OF INSUREDS
1. PRODUCERS OF MOVIES
These types of insureds can be categorized as:
A) Major Studios – producing anywhere from 10 to 20 movies a year often at the same time. These are familiar names, i.e. Disney, Fox, Paramount, Columbia, MCA/Universal, etc. Up until 1990, we insured four (4) of these majors. At present we chose not to insure any of them because of the inadequate rates and broad policy conditions.
B) Independent Producers – these are sizable producers who are not as financially strong and who do not possess the companion operations of a major, but who can produce 5 to 10 movies a year. They will make individual deals with the major studios in order to get their films released or distributed. Often the majors will provide part or all of the financing.
C) Other “Independent” Producers – this can range from a few peoople getting together to film their “Dream” project to a larger organization capable of producing one or two movies a year. The smaller ones often use their own money and produce modest budget films. The larger ones will use a combination of their own money and outside financing.
II. PRODUCERS OF COMMERCIALS
These will range in size from $200,000 in gross production costs to $20,000,000 in annual GP. Commercials can vary from table top in studio shoots to extensive multi-location productions. In some cases multi-country locations can be utilized for the same commercial or series of commercials.
III. PRODUCERS OF DOCUMENTARIES, SHORT SUBJECTS, OR INDUSTRIAL FILMS
The definition of the above terms are very elastic and can be used to mean the production of a story about the life of George Washington or how a washing machine works. They are generally categorized by budgets in the $100,000 to $500,000 range and longer production times than commercials. Sometimes a documentary can take a couple of years to complete because of the necessity to visit numerous locations, research and gathering various elements such as stills, slides, and art work to incorporate into the final production.
IV. PRODUCERS OF MUSIC VIDEOS
Just what it says. These can be straightforward filming of a live performance or multi-location shoots involving aircraft, watercraft, autos and involving various stunts and pyrotechnics.
Note: Often insureds presented to you will be a combination of II III and IV in rare cases do all of the above.
V. PRODUCERS OF LIVE THEATRICALS
Our insureds in this category mainly are producers of Broadway shows and tours of successful Broadway shows. We can consider regional theater companies, but should avoid other live events such as concerts, night club acts, music groups, comedy acts and other live events that don’t fall into the category of a play or musical play set on a stage presented in a theater. Often the theater owners will try to pass off their liability to the producers. We should avoid these situations. In fact in New York where we have a substantial book of business, we do not write the Primary General Liability because of the uncertainty of the contracts between the theater owners and the producers.
TYPES OF POLICIES
I. ENTERTAINMENT PACKAGE
Used for producers of movies, T.V. shows and some documentaries. Each production should be underwritten and priced on the specific aspects of that production. The productions generally vary greatly from one to another hence the need to treat each one separately.
II. PRODUCERS PACKAGE (SPECIAL ENTERTAINMENT PACKAGE)
Used for producers T.V. Commercials, Short Subjects and Industrials and Music Videos. The general assumption is that each production is somewhat similar to each other and to try to underwrite each one would be costly and time consuming. Although that may not be true today it has become the custom in the industry and we have to make our best efforts to gather the proper information to assess the activities of the insured in any twelve-month period.
The above two policies are our core products. In other words, we are not interested in writing Liability, Workers Compensation, producers Errors and Omissions and Automobile policies on an insured if we don’t write one of the “Property” policies. We consider the Casualty coverages “accommodation” policies to the packages. Additionally, if we feel that one or more of the Casualty policies offer an unacceptable risk of loss for a particular insured then we will forego writing the entire account if need be. In most areas the market is such that one insurance company will write the entire account not just pieces. There are some exceptions to this general rule, but not many. There are some specialist Producers Errors and Omissions markets who will write te E & O policy without writing the other parts of the account.
III. PRODUCERS ERRORS AND OMISSIONS
Covers libel, slander and other forms of defamation as well as copyright infringement and other named perils. Each production is underwritten separately and priced according to its content, length of time and ultimate use. Often this insurance is required by the purchaser of the production i.e. distributor or broadcaster. There is a “blanket” policy available for the producer of T.V. Commercials but this is generally purchased only by the larger commercial producers. The producer of T.V. Commercials are generally not responsible for the content of the commercial. The content is often the responsibility of the advertising agent.
IV QCC LIABILITY SECTION WITH SPECIAL AMENDMENTS
We use the QCC policy with 7 or 8 amendments tailored to the issues that deal with film production. We felt the need to cut back or clarify certain coverages in basic QCC Liability Section. We also have our own rates and rating base that is different from that used by other insureds.
V WORKERS COMPENSATION
We use the same compensation policies used by CLD.
VI AUTOMOBILE POLICIES AND ENDORSEMENTS
If there is an owned auto exposure that is handled exactly like CLD would issue it, in accordance with the rules and rates for the specific state where the exposure exists. We don’t seem to have that many owned auto risks and have the same basic dislike of this class as CLD. If this presents an unacceptable exposure then we will forgo writing the rest of the account if need be. Most of the producers have a non-owned and hired car exposure since they often have short-term rentals of vehicles ranging from private passenger cars to equipment trucks or mobile homes and anything in between. These are often problematic situations with very little ability for us to underwrite the drivers and where they are going.
VII THEATRICAL PACKAGE
This is for producers of theatrical plays and is a combination of property coverages.
SPECIAL ENTERTAINMENT PACKAGE
(New Name – Producers Package)
NEGATIVE AND FAULTY SECTION
- Provides all risk coverage for damage to the negatives or video tapes and derivatives thereof.
- Provides name perils coverage for the “faulty perils”.
- All risk coverage is very broad and includes full Earthquake and Flood Coverage.
- Covers the negatives while in the insured’s possession, while in transit and while in the custody of film processors, editors or other contractors.
- Premium is developed based on the gross budget.
- This coverage is auditable and adjusted on the actual gross production costs for the past 12 months.
- Losses are adjusted based on the budget or actual costs incurred to complete filming. (See definition of production costs).
- Review of policy provisions with special emphasis on definition of loss.
PROPS, SETS AND WARDROBE
- Provides all risk coverage on cameras, camera equipment, sound, lighting, etc.
- Owned and rented.
- Excludes aircraft, watercraft, railroad cars or railroad equipment.
- Motor vehicles mobile equipment vans, motor homes, and studio location units also excluded.
- All risk is broad and includes full Earthquake and Flood.
- Limit is selected based on actual values at risk.
- Loss of use is covered.
- Valued at actual cash value but can be endorsed to replacement cost.
- Premium is based on limit of liability.
Review of policy conditions
THIRD PARTY PROPERTY DAMAGE
- Provides legal liability coverage to property in the insured’s care, custody and control.
- Excludes property covered under other sections of the policy even if the insured did not purchase the coverage.
- Limit is based on estimate of the value of the property in the insured’s care, custody or control.
- Premium is based on the limit selected.
- We will pay the costs of defense if suit is brought; this is within the limit of liability and not in addition to.
Review of policy conditions
EXTRA EXPENSE
- Should be renamed as extra expense caused by damage to property or facilities used by the insured.
- Provides all risk coverage for damage to property or facilities used by the insured.
- If damage or destruction occurs and the insured has to halt production, this section pays for the additional expense to move to another location or extra shooting days incurred.
- Again all risk is broad and includes full Earthquake and Flood Damage.
- Limit is based on the amount of money necessary to re-shoot or relocate in the event of a loss.
- Premium is based on the limit.
Review of policy conditions with special emphasis on the definition loss.
OFFICE CONTENTS
- Provides all risk coverage on personal property including improvements and betterments.
- Covers owned and rented equipment.
- Limits should be selected based on actual values at risk.
- All risk is broad and includes Earthquake and Flood.
- Premium is based on limit of liability.
- Valued at actual cash value but can be endorsed for replacement coverage.
Review of policy conditions.
COMMERCIAL VEHICLE PHYSICAL DAMAGE
- All risk coverage to motor vehicles scheduled on policy.
- Excludes owned vehicles and private passenger cars.
- Rented private passenger cars can be covered with suitable sub-limits.
- Limit is based on actual values at risk.
- Premium is based on limit.
- Valuation is on actual cash value and cannot be endorsed to replacement cost.
Review of policy conditions.
Review of general policy conditions of the entire policy.
ENTERTAINMENT PACKAGE
I. CAST INSURANCE
Review separate memo
II. EXTENDED PRE-PRODUCTION CAST INSURANCE
- Provides coverage for specific cast members for extra weeks than is normally provided.
- Generally these cast members are of utmost importance to the production and an illness or injury during the extended period would cause a loss.
- Must be underwritten very carefully.
- A recent example is a 68-year-old director with heart problems.
- Premium is based on the number of weeks covered, age and limit.
Review policy conditions.
III. BUDGETS
- Gross Budget – the total of all costs for a specific production.
- Gross Insurable Budget also known as Negative Budget – the total budget minus the items excluded in the policy. (The cost of underlying rights and materials including story, scenario, music rights, sound rights, royalties, permanent sets, owned wardrobe, owned props, owned equipment premiums paid for this insurance policy. Interest paid on loans and personal property taxes. Most of these items can be included in the policy if the insured wants to. (See definition of production costs Clause XIII in General Policy Conditions).
- Net Insurable Budget – the gross insurable budget minus the post production costs.
- Above-the-Line-Budget – all costs that are attributed to the creative side of budget. These are generally development costs. Costs of rights and costs of talent and director and producer.
- Below-the-Line-Budget – all costs that are attributable to the technical side of the production, i.e. cost of housing, meals, rental of equipment.
IV. NEGATIVE & FAULTY, PROPS, MISCELLANEOUS EQUIPMENT EXTRA EXPENSE AND THIRD PARTY P.D.
- See discussion of these coverages as outlined in the special endorsement package section.
V. APPLICATION
Review application
VI. MEDICAL FORMS
- Three types
- Medical form to be completed by company approved doctor. The cast member must be examined.
- Affidavit of good health completed by cast member and does not require examination by a doctor. Used only in special circumstances.
- Supplemental medical form. More extensive then medical form used for any one over the age of 65 and anyone who we feel has specific medical problems. Note: the medical form also has to be completed.
VII. PREMIUM DEVELOPMENT OF THE ENTERTAINMENT PACKAGE
- Each section of coverage is rated individually based on rules and rates in the rating manual.
- An account rate can be developed by adding up all the premiums developed and dividing by a common exposure base such as the net budget.
- At the end of the policy period an audit must be completed and the policy has to be adjusted. This will produce either an additional premium or a return premium.
- Generally an outside auditing firm is used since these audits are specialized and no one in the company is trained to do them.
- For branches outside of Downtown, Los Angeles, and Woodland Hills – consult with one of those branches for firms to use. Check prices especially if locations require travel by the auditing firm.
Review rating manual
PRODUCERS ERRORS AND OMISSIONS
I. APPLICATION
- The first step is the completion by the insured and his/her attorney of an extensive application.
- This application must be completed and signed by the insured.
- It becomes a part of the policy. It must be attached to the policy.
- Any statements that are false or inaccurate will be used in the denial of a claim.
- All applications must be completely filled out or the underwriter should return it to the insured.
- All applications and if need be scripts must be referred to one of our outside attorneys for review and clearance.
- Offices outside of Downtown, Los Angeles,Woodland Hills and Toronto should consult with one of those offices to help them in selecting an attorney.
- An account must be set up with the attorney so that fees can be paid in an orderly manner.
PREMIUM DEVELOPMENT
- The premium is based on the limits of liability, the deductible, the type of production and the length of the production. Also the number of years the policy is issued for. This is one of the few policies that can be issued for more than one year and often is issued for three years. This is because license agreements between the insured and the distributor of the production requires the term to be for three years. However, we should not issue for a term of more than three years even if we are requested to do so.
Review rating manual
- You will be asked to add numerous additional insureds to the policy.
- Coverage is provided in the policy for distributors and exhibitors of the production. BUT an extremely important point to remember is that we will not PICKUP THE ACTS, ERRORS AND OMISSIONS OF THESE ADDITIONAL INSUREDS.
- Beware of adding as additional insureds anyone who is contributing material to the production especially if they are not employees of the insured. Anyone who is not covered by the warranties of the application is a problem since we would have difficulty in using those warranties to deny a claim.
- Be very careful with movies that are based on a book, or a movie based on another movie. The author of a book may be able to grant certain rights to us but may be unable to grant other rights to us.
- Finally, each production should be underwritten separately. There should be no such thing as a “blanket” policy covering all productions of an insured.
- It is extremely important how you word the “Insured Production” on the Declarations page of the policy. It should be very specific, i.e.:
Insured Production: “Gone With The Wind”, a movie for theatrical release.
- Beware of coverage requests for “Injunction” coverage and “Merchandising”. These have to be underwritten separately and very carefully.
- There should be no discussions with the brokers about terms, conditions or premiums until the application is received, and cleared.
- The underwriting of this class must be done very carefully.
- Do not be fooled by the seemingly harmless content of a production. It is not so much what is in the production but how the insured went about securing the rights be it story, music, or other items.
- Obviously, content does count and stories about real people, events, places, etc. will provide more exposure to loss.
- The underwriter should obtain the scripts and review to understand what is in the production.
- Beware of old movies and movies that are in the “public domain”. This generally means that the insured has not paid for any rights. These are tricky legal areas and defy a simplistic approach.
- Coverage on the title of a production is automatically excluded unless a separate title report is completed by a recognized title search firm. This title report should also be sent to our outside attorneys for review and clearance. If the title is not cleared, it must not be covered.
- A minimum deductible of $10,000 is used. The deductible can be increased if the production is problematical.
- Remember – we would pay the costs first in the event of a claim and then go after the insured for reimbursement. If the deductible we need is high, we must first determine if the insured is capable of paying us back.
- The policy is difficult to understand in the sense that the perils covered seem to be things that the insured would intentionally do.
- This policy is intended to cover the insured for actions brought against him for specific torts.
- An important exclusion is that if the insured knowingly fails to act as he/she should have acted, i.e. using music without paying for it, then that claim should be excluded. The problem is that we would have to prove that he/she acted in that manner.
- The policy is written on a claims made, defense within the limits basis except in New York.
- The usual limit is $1,000,000 per occurrence $3,000,000 policy aggregate.
Review policy terms and conditions.
CAST AND MEDICALS 1/5/94
What is it for?
Insure producer for loss by accident, illness, death or kidnapping to a covered cast member.
How is it underwritten?
A. Named cast members only.
B. Can also insure “behind the camera” people (i.e. director, cinema photographer and in some cases the producer)
Example: Dino DeLaurentiis.
C. “Accident” only coverage can be granted prior to receipt of medical.
D. Kidnap coverage also granted without receipt of medical.
E. Medical should be only on company forms and by company approved doctors.
F. If there is a very good reason why a company approved doctor cannot be used then we can grant permission to use any licensed doctor except cast members own personal physician. Our form must be used.
G. Underwriter must review medicals immediately upon receipt and tell broker about my coverage restrictions. There is a five (5) day requirement in the policy. If we don’t communicate within that period, we may have to grant full coverage. (Mention that it is up to the broker and insured to deliver medicals to a non-Chubb doctor.)
H. What we are seeking to do is underwrite each cast member and to bring them to an “average risk”. So that if a cast member has some kind of medical problem, we will attempt to exclude it. If this presents a problem to the insured, we can either increase the premium and the deductible or both. These are judgment calls and must be exercised carefully. It is wise to consult senior staff members before agreeing to terms and conditions. In many cases, the condition will be so severe that we will not be willing to negotiate the condition and must insist on an exclusion.
I. When reviewing a medical, the first thing to do is make sure all boxes are checked either Yes or No. Any answer left blank whether inadvertently or not will undercut our efforts to deny a claim or seek action against a cast member who may have lied when completing the medical.
J. Also make sure that the medical is signed by the cast member. Return any medical that is not completely filled out immediately.
K. A supplemental medical form must be completed on any cast member 65 years or older. There will be cases where you will need this form completed on someone who is younger if they have known medical problems.
L. An affidavit of health can be used in some cases. This is completed by the cast member without having to see a doctor. These cases are rare and are only used when someone has already had a clean medical in accordance with our standards and is to be insured again within a short period of time from when the last medical was completed.
M. A medical should not be more than 21 days old prior to the start of coverage.
II. Policy Review
A. Insuring agreement.
B. Term of coverage – must be very specific, stated in policy.
C. Exclusions
D. How do we pay in the Event of a Claim?
E. Definition of production costs. (In general policy conditions).
F. Abandonment provisions.
G. Special provisions.
1. Stop Date
2. Two weeks in contracts or leases.
III. Policy Review – continued
H.
I.
J.
K.
IV. Deductibles
Should depend on the size of the budget. Lowest deductible permitted is $10,000. As the budget increases deductible should increase in proportion. Current conditions make it difficult to obtain a deductible of more than $25,000. We should constantly try to secure higher deductibles. Our goal should be to try to achieve a deductible equal to one day’s filming. Roughly, a $10,000 production might have average costs equal to $100,000 a day. At some point in the future, this may be attainable.
V. Pricing
A. A rate should reflect the following factors:
1. Number of weeks of filming.
2. Number of cast members insured.
3. Specific conditions that increase the chance of loss i.e. remote locations, high hazard activity.
4. Any unusual medical conditions of cast members that are not excluded.
5. Deductibles.
6. “Underage” or “Overage” cast members. Generally under 9 or over 65.
7. One or two cast members who are indispensable to the production.
8. Any unusual contract provisions such as guaranteed money, “pay or play” provisions, tie-in contracts.
9. “Essential Element” requirements from distributors or financiers. This is similar to 7 but not entirely the same.
10. Higher than usual chance of abandonment.
11. Loss History of Insured or covered cast member (i.e. Michael Jackson or Stanley Kubrick).
12.
13.
B. The selected rate is applied to the “Net” Budget. The term “Net” Budget is a term used by the movie business. It reflects all costs incurred by the insured up to the time that principal photography is completed. There are certain costs that are excluded for insurance purposes (see definition of production cost in general policy conditions.)
In the case of cast insurance, the net insurable budget accurately reflects our exposure to loss since it is unlikely that we would pay more than this amount in a worse case scenario.
VI. How to Pick a Limit.
A. The limit should be an amount equal to or slightly higher than the net budget. If you get a request to insure a limit substantially above the net budget, you should look at this carefully. You should never agree to this if the policy is written on a flat, non-auditable basis. (This in itself should be rarely done.)
B. On a policy that is designed to cover multiple productions with preset limits you will have available limits that might be substantially higher than the budget. These situations should only occur on “studio” accounts or large independent producers. In any event, we will pay no more than the actual budget amount spent up to the time of loss. Also these policies are always auditable.
VII. Audits
A. Premium audit should be conducted at the end of principal photography not at the end of the production.
VIII. Losses
We can categorize losses into the following areas:
1. “Normal” loss from medical condition not indicated on medical form, i.e. cold, flu, etc.
2. Loss from condition indicated on medical; i.e. cast member with history of heart problems.
3. Accident while performing duties in movie.
4. Accident when not in movie. (Remember this insurance covers a cast member 24 hours a day regardless of what they are doing unless we exclude certain activities that we consider hazardous).
5. Kidnap of a cast member. (We should pay particular attention to this when insuring a movie in a country with a history of this activity or a particularly turbulent time in any country or locale).
IX. Extended Pre-production
A. Coverage for cast member for extraordinary length of time prior to principal photography.
B. This is generally requested for one person who is critical to the entire production.
C. Must be underwritten very carefully. Secure all details about this person or persons. Pay particular attention to what they will be doing during the time we are being asked to insure them.
Ask about any sums guaranteed to this person. Generally, this person should not be paid if they are unable to work because of death or illness or injury, but someone else might be guaranteed payment. If the insured cast member is guaranteed money if they are unable to work because of death or illness or accident. We have to look at this carefully. Secure a copy of the contract and review with home office.
D. Pricing should be based on the age of the person, and the number of weeks insured, as a beginning. Then specific factors should be taken into account. Such as -
a) Limit
b) Activity of the cast member during the term of coverage.
c) Unusual contract terms.
d) It is always a condition that we insure the full production when they go into principal photography.
Caution: These requests are generally problematic and should be handled very carefully. Of then they are requested when unusual conditions are required to be covered. You should always review with home office.
QCC LIABILITY POLICY/ENTERTAINMENT
I. BASIC POLICY
* Covers bodily injury, property damage and personal injury arising out of insureds operations.
* Designed to protect insured from claims and suits brought by “third” parties meaning persons or properties not connected to the insured, i.e. general public.
* The issue with film production is that people who are actually employees of the insured may not be so legally.
* This is because the method of hiring is not always straightforward employment.
* Various hiring techniques are used either because of custom or for tax reasons.
* Many “employees” are hired by payroll service companies.
* These companies become the employer of record. They are utilized to provide payroll and tax services to the insured.
* Legally the persons hired are employees of the payroll service companies.
* In fact the payroll services are required to provide the workers compensation policies for these employees.
* This fact creates an ambiguity in the policy regarding the exclusion pertaining to employees bringing actions against the insured.
* Another problem is the adding of additional insureds to the policy.
* Film producers are required, mainly by contract to add many organizations to their policy.
* This is because they often utilize services of outside organizations for:
a) Rental of equipment or services.
b) Use of premises for location shooting.
c) Use of public facilities such as airports, bridges, tunnels, railroads, airplanes, etc.
d) Film permits required by various municipal authorities.
e) High profile individuals who are hired through their “loan-out company”.
f) In commercial production advertising agencies and sponsors whom the insured contracts with.
* Claims or suits can be brought by employees, independent contractors or the general public against these additional insureds as well as our “basic” insured.
* While we take the position that we will provide protection to these additional insureds if our insured is negligent we don’t want to provide coverage if the additional insured is negligent.
* In order to accomplish this, we should add the following wording to certificates of insurance and any policy amendments:
ABC is added as an additional insured but only as respects acts, errors or omissions of the named insured.
Review Basic Policy
Review Entertainment Amendments
PREMIUM DEVELOPMENT
* Entertainment package related liability below-the-line budget.
* Special Entertainment/Producers Package related liability policies – gross production costs.
Note: On small features written on an Entertainment Package, you may want to use the gross insurable budget.
* Limits of Liability should not exceed $1,000,000 per OCC/$2,000,000 annual aggregate.
* Additional premiums charged for:
1) adding additional insured.
2) municipalities requiring specific wording.
3) other specific requests regarding additional exposures to policy, i.e. high hazard stunts or utilizing difficult filming locations.
Review Rating Plan
AUTOMOBILE COVERAGES
* If owned auto is required, it should be written the same as CLD would issue; coverages, limits, deductibles, and premiums. If owned auto presents an unacceptable list of autos, then it should be avoided even if it costs us the rest of the account.
* Non-owned, hired, loaned or donated. Film makers often utilize vehicles owned by others.
* Getting a handle on the amount of exposure can be problematical since plans often change.
* Our best efforts must be made to determine the extent of risk.
* We utilize cost-of-hire amounts and the number of vehicles used.
* Vehicles used can range from private passenger to mobile homes.
* The use of deductibles and minimum premiums is required.
* The insured should be required to purchase all available insurance from rental companies.
* When employees use their cars, the insured should verify that employees have sufficient insurance on the vehicles.
* If we can avoid the auto exposure especially on small accounts so much the better.
Review Automobile Endorsements
WORKERS COMPENSATION
* We use the same rules, rates and methods as CLD.
* Our largest book in this class is theatrical productions.
* A fair amount of film and commercial producers use payroll service companies for a majority of persons hired but not all.
* Often we will be asked to provide a “catch all” policy to provide coverage on all other employees.
* We should avoid issuing these “catch all” policies on an “if any” basis and attempt to get an estimate of actual payroll for these employees.
* Also we should find out what types of employees are covered under our policy.
* We should document the file to show that a payroll service company is used.
* Often a claim will come in that should be covered under the payroll service company. We should be alert to this and notify the claim department that another policy should pay for the claim.
* The premium is auditable. A Chubb auditor can be used for these audits.
* We have to underwrite the production to be aware of any hazardous stunts or activities that may be covered under our policy.
* The only state that permits surcharge for stunts is California.
* If we are concerned that the stunts provide too much of an exposure, then the risk should be declined.
* We should try to persuade the broker to place the workers compensation in the state fund.
* Class Codes – check state pages for proper codes. They should fall into the categories of motion picture production for film production or theatrical production for live plays and musicals. The theatrical codes are separated in dancing and non-dancing codes. They are also separated into players, entertainers and actors and other. The all other codes cover the workers and backstage personnel.
THEATRICAL PACKAGE – THEATRICAL PROPERTY
* Identify the production covered on the Declaration Page, Item 3.
* Provides coverage on all property used in the production, i.e. stage properties, set pieces, costumes, wardrobe.
* Backstage property is also covered such as ladders, sewing machnes, tools, paints and office contents. Coverage is limited to $750 on any one item.
* Coverage is on all risk basis. This is broad coverage and includes earthquake and flood.
* If location used is in a flood or earthquake zone consideration should be given to either, limiting or excluding these perils. If necessary, the line should be declined.
* Policy covers property in theaters in rehearsal places or while in transit.
* Valuable items and antiques are sublimited in the policy (see policy conditions).
* Owned property is valued at replacement cost if replaced.
* Rented or borrowed property is valued at actual cash value.
* There is an 80% coinsurance clause in the policy.
* The limit of liability is based on actual values at risk.
* The premium is based on this limit.
* A modest deductible of $250 is used but should be increased as necessary.
* Loss of use is covered for rented property except for the perils of theft, mysterious disappearance or unexplained loss.
Review policy conditions.
EXTRA EXPENSE
* Covers the resulting extra expense caused by an insured peril to property or facilities used by the insured. This includes damage to the building.
* A two performance or two-day deductible whichever is greater applies.
* Profits are excluded.
* Policy provides for four (4) weeks of coverage in the event of damage to personal property and eight (8) weeks of coverage for damage to theater buildings.
* Coverage is on an all risk basis including flood and earthquake.
* Extra expense is defined as the ascertained net loss of continuing regular payroll, continuing advertising expenses extra transportation expenses, etc. (see definition of loss: Clause VII).
* Limit is selected based on eight (8) weeks of continuing expenses.
* Premium is based on limit of liability.
Review policy conditions.
ACTORS EQUITY FLOATER
* Coverage is necessitated by the agreement between the League of Theater Producers and the Actors Equity Association.
* Coverage is for the personal property of the members of the association.
* Limits of Liability
$100 cash pr member not exceeding $1,500 for all members.
* $1,500 for furs
* $1,500 for jewelry
* $3,000 for personal effects and clothing
* $6,000 total any one member
* The total limit is calculated based on the number of members covered multiplied by $6,000.
* There is an 80% coinsurance requirement.
* Premium is based on the limit of liability.
* There is no deductible in the policy.
* A deductible can be instituted if losses become a problem.
Review policy conditions.
CATASTROPHE ACCIDENT INDEMNITY
* This coverage is used for road shows.
* Divided into three (3) coverages.
* Coverages selected (A-B-C) should be indicated on the Declarations Page.
* Coverage Limit should not exceed $500,000.
* Coverage A-
injury, sickness, or death to at least 1/3 of the members or a minimum of six (6) members whichever is greatest.
Coverage B-
weather conditions so severe as to cause delay, interruption, postponement or cancellation.
Coverage C-
mechanical breakdown of conveyances or equipment used.
* Deductibles
2 Performances on Coverage A
1 Performance on Coverages B or C
Review policy conditions
Review application
ADDITIONAL UNDERWRITING ISSUES
ESSENTIAL ELEMENT – certain cast members or director are designated by a distributor or a bank as essential element. If these persons are unable to complete their duties then the distributor can refuse to take the property. These are special cases and must be discussed with Home Office.
DELIVERY DATE – an element in the contract between a distributor and producer stating that if the production is not completed by a specified date. The distributor (or network in the case of a T.V. production) does not have to accept. We exclude delivery date claims and are not interested in providing this coverage.
PAY-OR-PLAY CONTRACTS – if the cast member is available for work and the production does not go on the cast member is entitled to payment. This can affect us if, because of a peril insured under our policy, the production is unable to continue the size of our loss can be increased. The contracts between the producer and the cast members should not provide for payment to cast members if they are unable to complete their duties because of illness.
TIE-IN CONTRACTS – high profile individuals who require that they will only perform if some other actor or director will be able to perform.
An illness or accident to one of the persons involved can trigger a pull out by the other member. This can increase our amount of loss.
SPECIAL CHARGES FOR ADDITIONAL HAZARDS – a wide range of possibilities. The basic premiums charged cannot recognize the existence of these hazards. We should have a relationship with the brokers and insureds to inform us of any unusual conditions that come up, especially on annual policies for commercial producers. We should secure the who, what, where and when on these situations. We should then analyze and determine the extent of the additional exposures and agree on additional terms, conditions, and premiums. Consult with home office on these situations. These exposures can involve the package policies and the liability, workers compensation and automobile policies.
AIRPLANES, HELICOPTERS, WATERCRAFT AND AUTOS – all of the above can provide additional underwriting concerns. We always exclude liability claims from all forms of aircraft. We require the insured to purchase a non-owned aircraft policy. However, workers compensation claims and extra expense claims can occur. We must analyze these exposures carefully and determine if additional premiums and terms are necessary.
WATERCRAFT AND AUTOS – these items are excluded under our package policies. They are covered to a limited extent under the liability and auto policies. Again we have to determine the extent of the usage and determine if additional terms, conditions, and premiums are necessary.
COMPLETION BONDS
* Complex topic
* This is a form of insurance that guarantees the completion of a production within a certain budget.
* If the producer fails to complete, the bonding company will take over the production and pay for its completion.
* Completion bonds exclude claims that are usual to a production package.
* Sometimes they will ask us to expand our policy coverages. In most cases we should refuse to do so.
* This can cause a problem with us and the insured.
* We have to analyze these requests very carefully and make certain we communicate our objections clearly and concisely to the insured.
