Errors and Omissions Insurance and Broadcast Sales

Posted by – January 6, 2009

I’ve just talked to a director who’s sold a movie for broadcast and gotten a theatrical release, and he gave me the off-the-record skinny on some of his experiences and cleared up some other legal things we were discussing here.

Superchannel was interested in purchasing the broadcast rights to his movie, but required them to have Errors and Omissions Insurance. An E&O insurance company protects the broadcaster against getting sued for stuff: say you have a brand name in the shot, a store, or a person in the background. If they see themselves in a movie they don’t like they call up Superchannel or whoever, but Superchannel shuffles them off to the E&O insurance company. They have to settle with the person, or deal with it somehow.

So in this director’s case, they had to submit the movie to the E&O company and they assessed the potential risk and charged them accordingly. There was a brand of a local beer who’s appearance they were able to clear with the beer company since it wasn’t presented in a unpleasant way, which reduced how much they were charged. So every location/extra/music/actor/crew release you have signed is one less risk the E&O company has to take, and thus charge the moviemaker for. He thought companies and individuals were much more likely to be perceived as a risk than public spaces — he’d never heard of people having to produce permits from the city for on-the-fly shots. He imagined the insurance would cost $5-$10,000 but wouldn’t have to be paid until there was a broadcaster offer.

The rights to his movie, which he thought was pretty average or standard, sold for about $50,000 to Superchannel. So, overall, I think it’s worth it to do the paperwork as we go, as it amounts to location/extra/music/actor/crew releases drawn up and signed.

He said that broadcasters sometimes do presales based on a script, but they expect it to trigger other much bigger investor money (ie. Telefilm, who would be impressed you have a broadcaster); that they often have content input, and while this is not control, one is behooved to take it seriously if one wants to continue the relationship with other projects — a “too many cooks” situation. He threw out $15,000 as a hypothetical presale number, but it’d be based on a small percentage of the budget. Doesn’t sound worth it for the amount of shopping-around effort and potential interference.

3 Comments on Errors and Omissions Insurance and Broadcast Sales

  1. Colin says:

    Yeah, the old E&O. It makes sense to be aware of this every step. Very curious how they determine how to assign a price to it. I have heard of people suing for stuff like being in a photo in the background, etc.

    Check this story about a guy who had a flickr photo used iin Iron Man

  2. Tate says:

    This is also great info. If you end up finding a good E&O company or go through the process at some point, please update us on how it goes.

    I’m curious about E&O and clearances in documentaries. I’ve been slowly working on a doc about a poetry tour I was on years ago, and I have some great footage involving two people that I don’t know at all–no names, no releases and no idea who they were except that they were American. Those scenes would be terrific in the show, though. Could a broadcaster or E&O company turn down a whole project based on that? Any ideas on what recourse I might have in a situation like that?

  3. Chris says:

    Hi Tate
    I’m not sure about the specifics in that scenario but I know an insurance company that might be about to answer your question. They deal in E&O insurance I heard them speak at a short film conference. They are called Hunter Keilty Muntz & Beaty and their number is (416)597-0008 . Good luck

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