The show must go on – but inadequate insurance coverage may force it to stop. Many productions are high-cost and complex affairs. Lawsuits alleging copyright infringement, defamation, and other wrongdoings can lead to major financial losses. That’s why entertainment E&O insurance is critical for the entertainment sector.
What Is E&O Insurance?
Errors and omissions insurance (commonly called E&O insurance) is a type of professional liability insurance.
According to Investopedia, E&O insurance provides protection against claims of inadequate work or negligent activities. It is important protection for many types of companies and professionals. In fact, anyone who provides a service may need E&O coverage.
What Does E&O Insurance Cover?
E&O policies typically cover a variety of claims involving errors, missed deadlines, breaches of contract, and failure to meet professional standards.
Entertainment E&O insurance (also called production E&O insurance or media liability coverage) is a specific type of E&O coverage designed to cover the risks of the entertainment industry. According to IRMI, media liability coverage provides coverage for the following allegations:
- Defamation
- Invasion of Privacy
- Infringement of Copyright
- Plagiarism
Entertainment E&O Claim Scenarios
No matter how careful you are about rights, a lawsuit could affect you in the future. Even unfounded lawsuits you ultimately win can be costly. Consider the following scenarios:
- You use a song in your production. As the song is old enough to belong to the public domain, you are confident you can use it without purchasing rights. However, you receive notice that the particular version of the song you used is not in the public domain and the rights owner is suing you for copyright infringement.
- You reference a popular brand in one of your productions. You are confident the usage falls under fair use. However, the brand is unhappy with the depiction and decides to file a trademark infringement lawsuit. You believe the law is on your side, but the brand has deep pockets, meaning the legal battle will be expensive.
- You receive an unsolicited script from an aspiring screenwriter. You don’t even read it because you’re not looking for scripts at the moment and have a policy against reading unsolicited scripts. Later, you receive notice that you are being sued by the writer. One of your productions bears some similarity to the unsolicited script, leading the writer to sue you for plagiarism. You know that any resemblance is coincidental, but now you’ll have to prove this in court – and you’ll incur significant legal costs in the process.
- You use some stock footage in a production. You license the footage through a company that claims to own the rights. You keep the license on file and believe everything is in order. Then, you receive notice that you’re being sued by another party who claims to be the actual owner of the footage in question. It appears the company you licensed the footage from did not actually own the rights. Now, you’re liable for copyright infringement.
How Entertainment E&O Coverage Works
According to the Insurance Information Institute, E&O insurance pays for legal defense and judgements, up to the policy limit. Most policies include a deductible that the policyholder is responsible for in the event of a claim, which can range anywhere from $1,000 to $25,000. When deciding on your policy limits and deductible, it’s important to consider both your budget and your risk level.
Professional liability policies can be on either a claims-made or an occurrence basis. Claims-made policies provide coverage for claims made when the policy is in force, whereas occurrence policies provide coverage for events that occurred when the policy was in force, regardless of when the claim is made. This is an important distinction because claims may occur months or even years after the event in question. For example, imagine you do not renew your insurance coverage for a production because the production is over. Then, you receive a lawsuit alleging copyright infringement. Whether you still have coverage for the claim depends on if your policy works on a claims-made or an occurrence basis.
Do You Need Entertainment E&O Insurance?
Tangram provides E&O insurance and other important coverage types for the entertainment sector. We work with top entertainment insurers to help production companies, independent producers, filmmaking companies, music companies, and other businesses secure coverage and manage risks. Learn more.
