Truth About Errors & Omissions Insurance in the World of Indie Film Distribution. Error and omission insurance (E&O insurance) is something that every film producer needs if he wants to sign a film distribution agreement.
I’m not an entertainment attorney or an insurance salesman, but error and omission insurance protects you and the film distributor with whom you enter into a contract from several common lawsuits in the entertainment industry.
These include allegations of violation of the contract, copyright infringement, defamation or degradation of products (which show the marks on the camera), invasion of privacy, violation of the title, slogan and many other bad legal news.
It is an insurance policy that protects the ass of a film producer and a distributor of films during activities in the entertainment sector.
Mistake and omission insurance doesn’t take care of the creative side of making films, so many independent film producers often don’t include it in their movie budgets.
But if you want to sell your show to a movie distributor, you’ll have to learn what it’s about at some point.
This is unless your movie distribution plan is using your blog to sell digital downloads or DVDs online or hit the streets with copies in the trunk of your hybrid vehicle.
I know more than a couple of independent directors who make decent money by selling films that way without ever worrying about the cost of insurance for mistakes and omissions.
I respect their energy and push them out to sell their films directly online or in person in every way. This is a post on self-distribution left for another day.
Error and omission insurance Catch-22 has to do with film distributors.
All co-producers of distribution agreements Tim “Timbo” Beachum and I have been involved in the sale of independent films to reality programs involving E&O Insurance.
After you run out of your movie’s odds, you’ll want to get a significant distribution for it.
This means working with a film distributor to be distributed by the main national and international points of sale in all possible ways.
Film distribution offers for independent cinema usually come in two ways. A film is shown at several film festivals, attracts the attention of the distributor, and a film distribution agreement is offered to acquire the rights or an offer is made to purchase the rights to the film.
Or skip the film festival circuit and contact film distributors directly with a screener and other marketing materials such as artwork, etc. If they like what they see, a distribution agreement is sent your way.
At this point the euphoria of making a film is gone. Now you’re dealing with the film making business. You have film investors that you have to repay with interest.
Even if it was your hard-earned money invested to produce your film, you will want to be able to repay yourself with interest.
Independent directors all make films from different financial locations, personal motivations, and creative needs. None of the reasons you make films is really important to a distributor.
When you’re dealing with film distribution agreements, it’s all about business. So once the film sales representative, the entertainment attorney or you have repeated your film to conclude an agreement and sign a film distribution agreement, you will be immediately hit by the list of film products.
The list of upcoming films can put an unprepared director to the test. Once again the list of movie results is a topic left for another post.
On this post for film production, we are focusing on error and omission insurance, which is one of the key results that a film distributor requires to meet promptly.
As in a Hitchcock film, I mentioned Catch-22 with Error and Omission Insurance in the mail, now it has to be used.
Buying insurance for errors and omissions from a reputable company is always much cheaper than relying on a film distributor to cover costs.
The Catch-22 is that some, not all, but some film distributors who deal with the release of indie-produced films use E&O Insurance to look away from independent directors at an inflated cost.
The film distribution company will tell an independent director who has no insurance for errors and omissions not to worry. They will establish a policy with an insurance broker that they know, pay it and deduct the cost from any future advances or royalties on the film.
It sounds good if you don’t have the money to buy an E&O insurance policy on your own, considering that no money is issued from your pocket in advance. But you don’t feel well when you have the advance upfront or after the royalty payments hit hard for E&O insurance.
You can end up paying anywhere from 200% to 400% markup on the cost. As I said, not all film distributors that do independent film releases do this type of BS, but there are those that do.
Every company has people out there to rip you off. Dealing directly with an agent to purchase your insurance policy for mistakes and omissions will always save you money.
But I perfectly understand how you end up finishing a movie and end up not having a hundred dollars in your budget yet to face the real costs of getting movie results.
It is a smart move in pre-production to contact the manufacturer’s error and omissions insurance companies to compare quotes. Once you have those prices you can put it in your budget.
I like to include it as part of the postproduction budget as a line item. It helps me remember as an independent film producer working on a tight budget that after wrapping a film, there is still a long way to go to get post-production and film results.
Even if you know that you will not have the money for E&O insurance after signing a film distribution agreement, at least knowing what costs they cost you can negotiate the costs that the distributor will charge you.
This is the part I call Catch-44. Be wary of dealing with film distributors who do not accept the Insurance of errors and omissions policy.
They may have special requirements as your policy does not come from an authorized courier in their state or some other reason for refusing your E&O insurance.
If you’ve already signed an agreement with them before asking if your Mistakes and Omissions insurance policy meets their requirements, you may be in a fight.
You have followed the rules and saved money by purchasing your E&O insurance policy, but now you are banging your head on this problem. If you haven’t signed an agreement, switch to another distributor.
As long as your E&O insurance policy comes from a reputable company, another film distributor will honor it if you want your film.
If you signed on the dotted line, you may have to suck and bite the bullet and go to a broker recommended by the film distributor who will usually charge a little more than you would have paid for yourself.
The insurance company does not add the markup. It is the film distributor that adds their juice to do you a favor to cover the costs.
The truth about insurance for mistakes and omissions in the world of independent film distribution isn’t always fair or nice, but it’s life.