The Naked Truth About Errors and Omissions Insurance in the World of Indie Film Distribution
Errors and Omissions Insurance (E & O Insurance) is something every movie producer needs if they want to sign a movie distribution deal.
I’m not an entertainment attorney or insurance salesperson, but Errors and Omissions Insurance protects you and the movie distributor you sign a deal with from different lawsuits common in the entertainment business.
These include allegations of breach of contract, copyright infringement, defamation or degrading of products (showing trademarks on camera), invasion of privacy, infringement on title, slogan and lots of other nasty legal salvos.
It’s an insurance policy that protects a movie producer and movie distributor’s ass in the course of doing business in the entertainment industry.
Errors and Omissions Insurance doesn’t deal with the creative side of making movies, so lots of times some indie movie producers don’t plan for 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 all about at some point.
That’s unless you’re movie distribution plan is using your own blog to sell digital downloads or DVDs online or hitting the streets with copies in the trunk of your hybrid vehicle.
I know more than a few indie filmmakers that make decent money selling movies that way without ever having to worry about the cost of an Errors and Omissions Insurance.
I respect their energy and push to get out there to sell their movies directly online or in person through all sorts of ways. That’s a post on self-distribution left for another day.
The Catch-22 with Errors and Omissions Insurance has to do with dealing with movie distributors.
Every distribution deal coproducer Tim “Timbo” Beachum and I have been involved with from selling indie movies to reality programs has involved E & O Insurance.
After you finish your movie odds are you’re going to want to land meaningful distribution for it.
That means working with a movie distributor to get released by mainstream retail outlets domestically and internationally in every medium possible.
Movie distribution deals for indie cinema usually happen two ways. A movie is screened at different film festivals, gets the attention of distributor and a film distribution agreement is offered to acquire the rights or an offer is made to buy the movie rights outright.
Or you skip the film festival circuit and contact movie distributors directly with a screener and your other marketing materials like artwork etc. If they like what they see a distribution agreement is sent your way to consider.
By this time the euphoria of making a movie has faded. You’re now dealing with the business of making movies. You have film investors you have to pay back with interest.
Even if it was your own hard-earned cash invested to produce your movie you’re going to want to be able to pay yourself back with interest.
Indie filmmakers all make movies from different financial places, personal motivations and creative needs. None of the reasons you make movies for really matters to a movie a distributor.
When you’re dealing with movie distribution agreements it’s all business. So once your film sales representative, entertainment attorney or you rep your own movie to hammer out a deal and you sign a film distribution agreement you’re going to immediately get hit with film deliverables list.
The film deliverable list can knock an unprepared filmmaker on their ass. Once again the film deliverables list is a topic left for another post.
On this movie making post we’re focusing on Errors and Omissions Insurance, which is one of the key deliverables a movie distributor requires you to meet promptly.
Like in a Hitchcock movie I mentioned Catch-22 with Errors and Omissions Insurance in the post, now it has to be used.
It always a lot cheaper to purchase your own Errors and Omissions Insurance from a reputable company than it is relying on a movie distributor to cover the cost.
The Catch-22 is that some, not all, but some movie distributors that cater to releasing indie produced films use E & O Insurance to gouge the eyes out of indie filmmakers with an inflated cost.
The movie distribution company will tell an indie filmmaker that doesn’t have Errors and Omissions Insurance not to worry. They’ll set up a policy with an insurance broker they know, pay for it and only deduct the cost from any advances or future film royalties.
Sounds good if you don’t have the money to buy an E & O Insurance policy yourself considering no money comes out of your pocket upfront. But it doesn’t feel good when you have your upfront advance or later royalty payments hit hard for E & O Insurance.
You can end up paying anywhere from a 200% to 400% mark up on the cost. Like I said not all movie distributors that cater to releasing indie films do this kind of BS, but there ones that do.
Every business has people out to screw you. Dealing directly with an agent to buy your own Errors and Omissions Insurance policy will ALWAYS SAVE YOU MONEY.
But I completely understand how it goes to finally finish a movie and end up not having a hundred bucks left in your budget to deal with the real hard costs of getting through film deliverables.
It’s a smart move in preproduction to contact companies that specialize in producer’s Errors and Omissions Insurance to compare quotes. Once you have those prices you can plug it into your budget.
I like to include it as part of the postproduction budget as a line item. It helps remind me as an indie movie producer working with a limited budget that after we wrap a movie there is still a long way to go to get through postproduction and film deliverables.
Even if you know you won’t have the money for E & O Insurance after you sign a movie distribution deal at least by knowing what policies cost you can negotiate the cost down the distributor will charge you.
This is the part I call the Catch-44. Be wary of dealing with movie distributors that won’t accept your Errors and Omissions Insurance policy.
They might have special requirements like your policy is not from a carrier licensed in their state or some other reason to decline your E & O Insurance.
If you’ve already signed a deal with them before asking if your own Errors and Omissions Insurance policy satisfies their requirements you could be in a bit of a fight.
You’ve played by the rules and saved money by buying your own E & O Insurance policy, but now you’re bumping heads on this issue. If you haven’t signed a deal move on to another distributor.
As long as your E & O Insurance policy is from a reputable company another movie distributor will honor it if they want your movie.
If you’re signed on the dotted line you might have to suck it up and bite the bullet and go with a broker recommended by the movie distributor that will usually charge a bit more than you would have paid on your own.
The insurance company doesn’t add the mark up. It’s the movie distributor adding their juice for doing you a favor covering the cost.
The truth about Errors and Omissions Insurance in the world of indie film distribution isn’t always fair or pretty, but either is life.
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