That’s Entertainment!

Tabloids are flood-ed with stories of the mishaps that befall certain actors and actresses. For most, it may seem like mere gossip fodder. What is often overlooked, however, is that these celebrities are a main component of a business: the film business.

The unavailability of an actor can result in a total interruption of the filming process, while the production company remains financially res-ponsible for crew, equipment, locations, rentals and other expenses during this downtime. Damaging or preventing access to a set location can also lead to interruption or postponement of the scheduled filming at an additional expense to the production company.

Entertainment production in-surance packages, under certain conditions, provide protection against the extra expenses stemming from an interruption, postponement or cancellation caused by these types of situations. However, most production companies are unaware of the specifics of the policy and how it will respond to a possible loss.

Although most incidents are not foreseeable, there can be a smoother process to handle claims. Understanding potential problems, reviewing the policy, developing a plan before a problem occurs, dealing with the claims process and resuming production are all key steps in this process.

Review policy before production begins

The first step in any production interruption plan should involve reviewing and understanding the policy before the start of shooting. While policy wordings may differ depending on the underwriter, the general and special conditions or definitions of the standard production policy include the following:

• Special rights and duties: Under the terms of production coverage forms, the production company is required to ensure that all contract terms for performance services, facilities, property, equipment and supplies last sufficiently longer than the estimated time of completion. Before commencing filming, production companies should ensure they have reasonable flexibility to allow for possible interruption. Recovery may be limited if extra expenses incurred are increased due to a failure to meet contract term requirements of the policy.

• Notice of loss: Companies must contact the insurer immediately to report a loss. Given the transient nature of the production industry, delays in reporting can also mean that payment will be delayed or even denied due to the insurer’s potential inability to properly investigate and gather sufficient information.

• Due diligence: Production companies must use reasonable care and do all things reasonably practicable to avoid, minimize or diminish at their own expense any loss or circumstance that could result in a claim. The rule of thumb for this condition is for production companies to act as if they were paying for the extra expenses out of their own budget.

• Access to records and examination under oath: Companies should provide requested documentation in support of the loss amounts claimed and give adjusters immediate access to anyone who must be interviewed during the course of the investigation.

• Subrogation: Companies should also assist the adjuster in providing the required documents or other supporting evidence to assert recovery rights and ultimately minimize the loss.

Assess extra expense claims accurately

When an extra expense claim occurs, a significant number of variables can affect the end result. For example, if a cast member suffers a minor injury or ailment, there may be options to shoot around the individual until he or she is able to return, which in some cases prevents a loss. The most important initial step by the production company is accurately assessing the situation at hand, as well as available options. An experienced adjuster can assist in the evaluation and possibly identify alternatives of which the production may be unaware.

Provide appropriate documentation

Extensive documentation is required during the claims process, and while it is impossible to prepare all documents before an event, organizing what is available and preparing a checklist will expedite the process. While each loss is different, production companies may expect to be asked to provide the following documents, among other things:

•  Incident report detailing facts of loss, along with independent supporting documentation

•  Contact information for crew

•  All call sheets and daily production reports

• A separate accounting ledger set up after the incident to isolate and capture all insurance costs and gather all supporting documents to substantiate these costs (time cards, payroll reports, invoices, contracts, etc.).

Communicate early and often

Early and continued com-munication, along with the timely submission of the required information, usually will result in an expeditious and satisfactory resolution for all parties involved. Occasionally, a dispute will arise regarding general policy conditions or scope of the los. It should be understood that the policyholder does have redress under the policy through the appraisal condition, although there is a time limit on lawsuits. However, such instances are rare, as most adjusters, insurers and the production policyholder can usually come to an agreement regarding items under dispute.

Insurers are committed to paying what is reasonably owed under a policy. With the advocacy of the broker in any dispute, most issues can be resolved without legal action, as all parties work to find common ground for resolution.