Producers: Buy an E&O policy before going into production or wait?

Dave Stern: I think as an entertainment lawyer, we would always rather a producer’s errors & omissions (E&O) policy be obtained as early as possible, certainly before production would be ideal. In a lot of cases, for certain budget levels and depending on which parties are involved, certain broadcasters or distributors might require that policy in place.

There are obviously pros to this approach; not just because it is mandated by those third parties but it forces the production to get everything in order legally as quickly as possible: chain of title, cast and crew agreements, releases, any and all forms of rights and permissions that they need to go into production. The caveat to that is that some things just might not be obtained before or in the first couple days of production. Music rights, for example, are typically obtained after production. So, there will be some contracts that may need to be sorted out afterwards. But once E&O is wrapped up for the production, that is a huge hurdle that the production has jumped over and they can focus on other matters.

On a practical note, many independent production companies under certain budget levels may not have those third parties attached to the project before they go to camera. Maybe they have one or two.

So, they may not be mandated to get the E&O policy before it goes to principal photography. They might be obtaining E&O afterwards; maybe during post-production or even later on, once they get distribution or other interest from a sales agent or distributor.

The one pro to this approach is that when you complete the application, you have a good understanding of all parties involved at that point. Chances are that you have music rights obtained, you have any and all third parties and necessary releases, and if for some reason you didn’t get a location or individual to sign a release during production, you might be able to get it a couple weeks later.

The con to this approach is it all comes down to delivery: if you only obtain an E&O policy to finalize a deal with a distributor, that’s part of the delivery process and you might go through that part and realize the film is already made, the final cut is done, and if your clearance lawyer spots an issue, the option of removing it might already be too late.

The distributor thinks they’re getting the final cut and there might be a situation with the project that could hold up delivery or the deal generally. This is the negative of waiting late to obtain E&O insurance, especially if there are brands, logos, and/or permissions that have not yet been cleared.

Dave Stern is an entertainment lawyer and partner at Blaney McMurtry LLP

 https://www.frontrowinsurance.com/articles/producers-buy-an-eo-policy-before-going-into-production-or-wait