A typical film equipment insurance policy protects you from damage and/or theft of equipment, whether from a rental house or your own. Your policy cost will usually depend on the value of the equipment and/or rental package and the type of equipment covered depends on your policy. Yet, independent productions have been facing unique challenges when attempting to obtain equipment rental insurance. In order to qualify to rent from companies such as CinePower Rental, which will provide various equipment packages and also offer Sprinter Vans for equipment transportation, equipment coverage is not enough.
Not only do you need to purchase enough coverage for the equipment, but you now also need to purchase automobile liability so that you can drive the Sprinter van off the lot. Not a problem. Just complete the insurance application, indicate the need for auto coverage, and a quote will be provided to reflect the necessary coverage for your production needs. But when you receive your insurance certificate, the automobile coverage is missing.
Well, that must be an error. No problem. Call the agent and inform them of the omission. But instead of fixing the problem, the agent provides an additional quote for the automobile coverage that will cost you more than double the original quote. You can argue that the original quote should cover what was submitted in the application, but after a few minutes of hearing a song and dance, you realize you have only one choice to make. Pay the added amount or find another insurance provider.
Not one to be taken advantage of, you do the latter. Find another carrier who provides the type of coverage to fit your production needs. Request an application. Complete both the equipment and auto sections. Obtain a quote and pay it. Another certificate is generated and, wham, the same thing. Again you call the agent to find out what happened to the other half of your coverage, and the same song and dance and additional quote for more than double the original quote is the result. And what do we have here, ladies and gentlemen? A problem. Because this scenario is real and it has been happening far too often to unsuspecting production companies.
The first insurance carrier, Philadelphia Insurance Companies, with an office in Pasadena, offers film production insurance that covers equipment and auto as indicated on their application. Located in Los Angeles County, twenty minutes from CinePower, Philadelphia Insurance is no stranger to the policy needs of their sprinter van packages. Yet, for some reason, despite the application specifying the need for the auto coverage, that price point was omitted in the original quote. Only to cause the insured to get blindsided with a second astronomical cost for the auto coverage.
The second insurance carrier, Francis L Dean & Associates of California, LLC, uses the same tactics. Located in Los Angeles County, a little further away in Culver City, forty-five minutes from CinePower, they too are no stranger to the policy needs of the sprinter van packages. Yet, for some reason, despite the application specifying the need for auto coverage, that price point was omitted in the original quote and the coverage excluded from the insurance certificate.
Francis L. Dean Associates is a national underwriting institution that claims to offer complete coverage. According to them, you’ll deal with dedicated professionals whose main purpose is to create creative programs better than anybody else, regardless of the coverage necessary, from liability to inland marine.
When questioned why the coverage was misquoted, the agent, Kristin Eisert, blamed the insured for not telling her what was in the application. And then blindsided the insured with a second astronomical cost for the auto coverage.
This is a common scenario that small independent film production companies face in LA. Insurance companies use a bait and switch tactic to induce buyers to pay far more than what was quoted.
The “bait” in a bait and switch is when insurance companies offer their services with very attractive prices or terms. The “switch” occurs when the advertised bargain isn’t available or isn’t of sufficient quality, leaving you, the consumer, with an upsell. Unfortunately, independent production companies, particularly those owned by people of color, have had to bear the brunt of this bait and switch.
Insurance companies have been profiting from using a bait and switch tactic to lure clients into accepting insurance offers without full transparency. The problems that arise from this are twofold: First, insurance companies in California are duty-bound to act in good faith. This necessitates that both the insured and the insurer disclose all material facts relating to the insurance contract to be entered into. The lack of disclosure from insurance companies means that they aren’t adhering to this duty. Second, production companies are forced to pay more than what was initially quoted to save their production.
On several occasions, independent production company owners noticed discrepancies between the application for insurance they provided and what the insurance company delivered in the actual insurance certificate after they paid and were bound by the agreement. The certificates missed critical coverage, which forced them to pay three times more than the original quote.
Short-term production insurance return policies are frequently ambiguous. Even after the independent filmmaker had already paid the already exorbitant fee and received no coverage. Because the insurance failed to fulfill its obligation, logic says they should be entitled to a full refund. Instead, they are given the run-around by the corporation. It took the insured three months to receive a refund from Philadelphia Insurance for failing to provide coverage as specified in the application.
Why is this happening?
These tactics have been used unabated because independent productions operate fundamentally different from other insurance-covered businesses. Insurance companies understand the importance of the production process and how easily it may be derailed by not having insurance.
Production companies require short-term production insurance for their shoots. Any number of minor or significant things could go wrong at any point during production. For example, shoots can get delayed, the equipment can be misplaced or destroyed, crew members could get wounded in unfortunate circumstances, and the list goes on.
If you don’t have production insurance, you cannot rent from the professional rental house; if you use your own equipment, you’ll pay for property replacement and crew medical care out of pocket, or you’ll face liability litigation down the road. Having no short-term production insurance is clearly not an option. That is why it is critical to understand all aspects of production insurance.
Further, almost every state in the United States mandates filmmakers or production businesses to have insurance. Many film crews, for example, have access to workers’ compensation insurance, which covers medical bills and provides replacement pay if a member of the cast or crew is injured on the job. Other forms of damages, such as the loss of film-related assets or damage to production equipment, can be covered by film production insurance. Because your production insurance coverage may cover more than just you, you’ll need a certificate on insurance.
If you don’t have one, you’ll be stuck, and your production will be doomed unless you can show that you have insurance to cover rentals, your crew’s health and well-being, and anything else that comes up. Furthermore, the insurance companies often liaise with vendors to facilitate this deception, making it a breeding ground for more deception.
For filmmakers of color, the struggle continues.
Nobody can deny that independent filmmakers make a significant contribution to the industry. Hollywood is undeniably expanding, and the success of independent filmmaking, where the majority of Hollywood’s employees began their careers, is inextricably linked to the industry’s future. Unfortunately, independent filmmakers of color face various challenges, some of which have existed for decades and others that have only recently surfaced as a result of new technological breakthroughs in the industry.
So many independent companies had to either dig into their own pockets or rely on relatives and friends for funding. As a result, if you’re an entrepreneur of color who has elected to fund your business with your own money or with the help of family and friends, you’ll almost likely start with less money.
After leaping through hoops and hurdles, small-scale production businesses are now confronted with production insurance companies’ most diabolical bait-and-switch techniques, which ensure that they continue to profit while producers suffer.
In production, you want your production demands to be totally covered by your insurance policy. You never want to be caught flat-footed.
You want a policy that has built-in flexibility. For example, even though you typically shoot on sound stages, if your production has a cold-weather shoot, you’ll need a policy that you can add to. That’s why most annual production insurance policies allow you to add a customized add-on for a limited time.
Even for a one-day production, you should allocate 2 to 3 percent of your film budget for short-term insurance — at the very least $2,000-$3,000. Naturally, the more complicated your product is and the more expensive your equipment is, the higher this cost will be.
You must go via an insurance broker to purchase production insurance. Put some effort into it because a producer may only have one broker. However, three or four phone calls may be sufficient to supply all the information you require.
If there’s one thing to keep in mind, insurance companies aren’t always on your side, so it is your job to research and continue to evolve industry savvy. One valuable tool is The Diversity Production Pro, dedicated to educating our community about the various pitfalls they might encounter. If you have a production nightmare, send your story to firstname.lastname@example.org so that, together, we can combat these issues before they become obstacles.