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Errors and omissions insurance is a critical ingredient in any production insurance cocktail.
But what is an errors and omissions policy anyway? What does errors and omissions insurance do? How much does it cost? And why exactly do you need it?
In this post, we’ll answer those questions and more.
Let’s dive in.
Before we put Errors & omissions insurance under the microscope, take a moment to zoom out to the big picture by downloading the Filmmaker’s Production Insurance Handbook from Wrapbook.
Whether you’re reevaluating an old policy or purchasing a new one for the very first time, the filmmaker’s handbook provides an essential resource for understanding the production insurance process from top to bottom.
And if you use it to follow along with this post, the production insurance handbook will provide a more in-depth understanding of how an E&O insurance policy fits into and works with the rest of your production insurance package.
The handbook is comprehensive, easy to use, and- of course- free.
Now, let’s move on to the main event.
Errors and omissions insurance (often abbreviated as E&O insurance) is a specialized form of liability insurance that protects E&O policy owners against losses not covered by other, more traditional forms of liability insurance.
More specifically, a professional E&O insurance policy seeks to shield individuals and their associated business entities from financial harm incurred by legal claims of negligence or other mistakes made in the rendering of work.
So what is E&O insurance coverage in short?
In the simplest terms, it’s all in the name---errors & omissions insurance protects E&O policy owners from potential errors and omissions costs.
Professional E&O insurance quotes are a staple feature of many industries, particularly those that earn revenue by providing services to external clients. The question of 'what does errors and omissions insurance cover' will be answered differently according to how you define errors and omissions within each specific industry.
While this post will focus on the entertainment industry, to illustrate this last point, we can take a look at how E&O liability insurance might work in a few different industries:
In advertising, errors & omissions insurance protects companies against dissatisfied clients and litigious competitors.
If a client claims that an advertising firm turned in poor quality work or a competing brand claims that the firm violated copyright, an E&O policy would help the advertising firm defend itself in court or pay out any settlement amount within its coverage limit.
In the construction industry, errors & omissions insurance protects contractors from claims of poor workmanship, use of inadequate materials, or other errors made during a project’s construction.
If a client claims that a construction company compromised a building’s integrity by using the wrong type of concrete or steel, the company’s E&O coverage would give them the resources necessary to build an adequate legal defense against those claims.
In the legal industry, errors & omissions insurance protects lawyers and law firms against claims of negligence or any actions that may have otherwise harmed a client.
If a former client seeks damages due to poor legal advice, a law firm would activate their E&O liability insurance in handling the case.
In the medical industry, doctors and other medical professionals are required to take out a specialized form of errors & omissions insurance known as malpractice insurance.
Malpractice insurance is a form of errors & omissions liability insurance that provides financial protection against mistakes made during a medical procedure.
If a patient claims that a dentist’s cleaning created damage that necessitated a further dental operation, the dentist’s malpractice E&O coverage would help them pay the necessary medical costs.
Now that we have a broad concept of how E&O claims work, let’s get more specific and zoom in on how an E&O insurance policy might work in the production world.
What is E&O insurance coverage for a movie or television show? What can this kind of policy do for producers, production companies, and other filmmakers?
E&O liability insurance for filmmakers covers errors and omissions costs associated with your final distributed product after it’s in a position to be enjoyed by audiences, making it a critical component of your production insurance cocktail.
E&O claims filed in the film industry generally protect against errors and omissions costs related to intellectual property violations, but E&O claims might also be filed in response to issues of libel, slander, defamation of character, unauthorized use of a product or its ideas, and more.
But what is an E&O claim in practical, real-world filmmaking?
To illustrate how an E&O insurance policy works in the entertainment industry, let’s examine a few quick examples:
Writing a book or screenplay about someone can be risky. If the subject, or even a family member of the subject, feels ridiculed in any way, they could file allegations of libel, defamation, or invasion of privacy against a writer, publisher, or production company.
Even if the allegations are baseless and you win the case, errors and omissions costs incurred by your legal fees alone could total in the thousands or tens of thousands of dollars. In this case, maintaining the best E&O insurance policy possible would be essential for all parties involved.
With the intensification of copyright laws, music rights have become a common source of errors and omissions costs and should be thoroughly considered when seeking an errors and omissions insurance quote.
Both producers and distributors may be subject to claims of copyright infringement for the use of music that hasn't been cleared. In such a case, a strong E&O policy may be the only way to prevent potential costs that could devastate the financial wellbeing of a company or individual.
As you can see, E&O coverage can be absolutely essential to filmmakers in many situations. With that in mind, let’s take a moment to consider how errors and omissions insurance fits into the big picture of production insurance.
The key difference between errors and omissions insurance and other elements of production insurance is the time during which the E&O policy is active.
Unlike worker’s comp, general liability coverage, or equipment insurance, E&O coverage doesn’t focus on the physical liability issues associated with cast, crew, gear, or location safety. You won’t need to request COIs or negotiate with equipment vendors to activate your E&O insurance.
Instead, errors and omissions insurance focuses on the more intangible risks associated with releasing a given project out into the world.
So, is E&O insurance required to shoot a movie?
No, but it would be a very bad idea to distribute a movie without it.
The exact details and amounts covered by your policy will be determined when you finalize an E&O insurance quote.
Generally, what is covered will revolve around costs incurred within or in response to legal action brought against the policyholder.
A professional E&O insurance policy typically covers costs incurred in the following three forms:
When negotiating your quote, a solid E&O policy will cover your court costs and attorney fees up to a set limit.
If you lose a case in court, you’ll likely have to pay the plaintiff an amount specified in the judge’s decision. Errors and omissions insurance will cover that cost, again up to a set limit.
If you’re able to settle a lawsuit out of court, it will likely be because you’ve agreed to pay the plaintiff a negotiated amount, known as a settlement. E&O claims that end in settlements are often negotiated with the E&O policy in mind, meaning that settlements are less likely to exceed an errors and omissions insurance policy limit on their own when compared to judgments.
Now that we’ve answered--- what does errors and omissions insurance cover? --- let's talk about who needs it.
In general, any person or business entity operating in an industry providing services to clients should maintain some level of errors and omissions insurance.
However, the film industry is unique in that E&O insurance is only of real relevance to a select minority of those involved in a project’s creation. E&O coverage means very little to the vast majority of individuals working on a film’s cast or crew.
I mean, what is E&O insurance for a key grip? What is it to a production assistant?
While E&O insurance doesn’t make sense for most individuals working within the film industry; it's entirely vital for others.
In the film industry, errors and omissions insurance should matter a great deal to any person or company who may be vulnerable to lawsuits stemming from a project’s public release. This almost always includes producers, production companies, and distributors, but it may also include writers, directors, and others entwined with the project in more specific ways.
What is errors and omissions insurance to a production company?
What is E&O insurance to a film distributor?
And how much is E&O insurance worth to an independent producer?
Errors and omissions insurance is not required to produce a movie or other project, but it’s almost always required to sell or distribute that project.
And why is that?
As we’ve established above, E&O insurance provides essential legal protection to a project once it’s out in the world. Depending on the project’s unique circumstances, maintaining that protection or accounting for its future cost will likely impact any transaction regarding the project’s rights of ownership.
The costs associated with purchasing an appropriate E&O quote may affect the process of film financing. These costs will almost certainly come up when working with film distributors, whether you’re negotiating a theatrical run or trying to get your movie on Netflix.
The price of E&O insurance will vary from policy to policy, depending on its individual circumstances and limit requirements.
The cost of an errors and omissions policy can be determined by several factors, including but not limited to:
To determine the exact price of your E&O insurance policy, you’ll need to seek out the best E&O insurance quote possible, which brings us to our next point…
Figuring out how to get errors and omissions insurance can seem stressful at first, but the process itself is relatively straightforward.
To begin, all you need to do is reach out to your favorite film insurance companies and request a quote. Once you have a few E&O insurance quotes in hand, you’ll be able to compare them and make a purchase decision.
If you’re wondering about cost, you can get a quick quote with Wrapbook’s intuitive quote builder.
Along with a dedicated broker, we’re ready to help you find a policy that is in line with your project’s or production company’s overall needs.
With each project, these needs will likely be different. Sometimes E&O won’t be necessary, many times it will be. Having honest discussions about your project’s needs and even your overall fears (whether that’s inadequate coverage or spending too much) with a broker, will help mitigate those fears and determine what you actually need.
Figuring out how to get errors and omissions insurance is a crucial step, but figuring out how to maintain it over time is just as important.
After all, what is E&O insurance worth if your policy runs out in just a year or two?
Typically, you’ll need to renew your errors and omissions insurance on an annual basis, but you may be able to negotiate a shorter or longer term-length with your insurance provider under the right circumstances.
In film production, some E&O coverage is similarly provided as a part of a standard annual DICE insurance policy, but other arrangements can be made with an insurance provider if your errors and omissions needs are more specialized.
Errors and omissions insurance is a critical component of the production insurance cocktail that protects a project (and production company!) in the long run. If you’re still trying to figure out if you even need E&O insurance, consider reaching out to a broker. If you’re not there yet, no worries. Get familiar with coverage types and policy details by downloading our Production Insurance ebook. You can also get a quick quote at any time.
Wrapbook’s goal is to provide you with not only the payroll tools, but also the insurance tools you need for solid and reliable coverage.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
Loring is a Los Angeles-based writer, director, and creative producer. His work has been commissioned by a diverse range of clients- from Havas Worldwide to Wisecrack, inc.- and has been screened around the world. Through a background that blends project development with physical production across multiple formats, Loring has developed a uniquely eclectic skillset as a visual storyteller.
