How does COVID-19 affect production insurance?
I’ve been getting this question a lot recently, and with good reason. It seems like just about everything in our lives has changed so much over the past few months, so it would stand to reason that production insurance would also be taking some big hits. It makes sense, right? Most production activities have shut down across the country, with certain states slowly getting back to normal, so it has to affect the coverage that insures all of those productions, right? It must be difficult, or almost impossible, to insure production activities now, right?
Thankfully, no! Production insurance is still very much up and running and all of our carriers are still happily and easily selling this coverage, but it’s probably important to know why. The reason that production insurance is still running just fine is because production insurance never really covered COVID-19 in the first place. Just about every policy written in the past 100+ years has had a “Virus” exclusion on it, so most of the claims that people have made against their insurance policy have been excluded. Also, production insurance doesn’t have any coverage for productions that are shut down due to virus, so if your shoot got cancelled and you lost money on it, that wouldn’t be covered. So it’s a big of a good news/bad news situations. The good news is that production insurance is still available and there has been virtually no changes in the coverages offered and the prices of the insurance. The bad news is that the coverage really doesn’t respond to a COVID-19 claim anyway. However, most production companies aren’t buying their insurance for COVID anyway, they’re buying it because they need the coverage for permit offices, equipment and vehicle rentals, etc. If that’s still your main goal for buying insurance, then you’re fine. If you’re hoping for an insurance policy that is COVID-19 proof, you might be out of luck.
So what coverages are there that could possibly respond to a COVID-19 claim?
The big one is Workers Compensation. A Work Comp policy covers bodily injuries OR SICKNESS to your employees, and COVID-19 is no exception. If somebody contracts the virus while working on your set, that claim should be fully covered. However, the same requirement exists for all Work Comp claims: They must prove that they got the virus from work. If they just say they got the sickness while working for you, we would open up a claim and an adjuster would be assigned to investigate. If they find out that nobody else on set got the virus, and the employee who caught it also happened to be at a large family BBQ the day before the shoot, then the claim might be declined since it can’t be proven that it was a workplace issue.
Are there any coverages that you can NOT sell anymore?
There are a few types of policies that have been greatly restricted or completely removed from the insurance landscape. The first one is a completion bond. A completion bond is a type of insurance policy that would pay you back if you weren’t able to complete your production, and it’s often required by investors who you’re looking to get money from to make your film. It will be very difficult, if not impossible, to find anybody willing to sell you a completion bond right now. So many films are remaining incomplete with no completion dates in sight, and with the current state of the pandemic in the United States there’s a possibility that more “lockdowns” are in the future, so nobody would want to sell a policy like that. It would be similar to selling somebody a new fire insurance policy while a wildfire rages a couple blocks away in their neighborhood. The same way that the insurance industry calls moratoriums for fire policies in fire season, or earthquake policies after big earthquakes, this coverage is also out of commission for a while.
The only other coverage we have that is being restricted is Cast Extra Expense for Sickness. This is a coverage that would usually respond if one of your cast members gets sick and would pay you back for the extra expenses that you incur as you wait for them to return. This coverage used to be available with limits in the hundreds of thousands or millions of dollars, but right now it’s been scaled back to around $5k or $10k. So the coverage is technically still available, but it’s been reduced to a level that makes it basically useless.
When will all production insurance coverages be back to normal?
That’s the million dollar question, isn’t it? Insurance companies are notoriously very cautious and also typically a few months or a year behind the curve. I would say that nobody is selling any of these coverages until we’re at least a year after this pandemic being COMPLETELY behind us. As long as it’s still going on in a few communities, there are definitely going to be insurance company restrictions. However, insurance companies are also notoriously opportunistic and will sell anything that they think you buy. Get ready for all kinds of “pandemic insurance” policies being sold in the next couple years, all asking for a bunch of money in premiums to cover a pandemic that most likely won’t hit for another 100 years. The more things change, the more they stay the same. ?
Here at Equipment and Production Insurance, you can count on us to give you the honest answers and quick service for all of your production insurance needs. We want to help you see your business succeed. Contact Us Today with any questions you have, and let us help you choose the insurance that is right for you!