Films rely on the pre-production period to plan and get things in order before the project starts in earnest. While it may seem as though this time is more relaxed compared to active shoots, the reality is that pre-production can be even busier than the main event! Part of the challenge during this time is allocating sections of the budget to specific goals and needs, such as crew income and film production insurance.
How does a studio know how much insurance will cost before they apply for it? Pre-production is a great time to start carving out a portion of the insurance budget, and studios can make smart choices by comprehending what impacts insurance pricing and what level of control they have over that price.
Here is a simple guide for budgeting for film production insurance in pre-production.
What Kind of Film Insurance Do You Need?
Before any studio can accurately determine how much of its budget should go to film production insurance, it must consider what protection it needs. While some coverages are mandatory or non-negotiable, others can be useful for specific situations. For instance:
- General Liability Insurance – Essentially mandatory, as most venues and teams will not work with studios that do not carry it. Acquiring permits without it can be difficult or impossible because venues want protection should the studio cause damage to their property.
- Workers’ Compensation Insurance – Typically mandatory in most locations as it protects workers that are injured on the job.
- Equipment Insurance – Highly recommended but not mandatory. Most studios use equipment insurance due to the substantial value of their tools.
- Errors & Omissions Insurance – A common inclusion in insurance mixes because it covers the many mistakes that can be overlooked during production, such as accidental copyright infringement or trademark violations.
- Drone Insurance – Much less common, though becoming a more frequent inclusion as more studios turn to drones to capture shots.
Some studios elect to purchase each insurance policy individually. In contrast, others might rely on DICE insurance or a generalized film production insurance policy to tie these protections into a single, easier-to-use product.
Understand the Cost Calculations
Once a studio is more aware of the protection it needs, it can better budget for its insurance. Consider:
Average Cost
Regardless of what types of coverage a film will require, general advice suggests reserving between 1% and 3% of the film’s total budget for insurance. This number can vary, depending on how strong the coverage needs to be and whether certain inclusions, such as stunt coverage, must be added to a policy that does not normally include them.
Factors Influencing Costs
Studios should understand what impacts a policy’s cost to estimate better how to budget for the policy. Some of the elements that can increase insurance costs include:
- The number of individual policies
- Purchasing policies from multiple insurers
- Choosing policies with a low deductible
- Having a history of frequent claims with no proof of changes to processes that may reduce claims in the future
How to Decrease Costs
While film insurance comprises multiple factors outside the studio’s control, some elements are adjustable to reduce costs. Be sure to:
Balance coverage with cost – Studios should not decrease costs by gutting important insurance policies but should not overpay for protection they will not use. Consider calculating how much coverage will address hypothetical issues and paying for no more (and no less) than that.- Bundle – Getting multiple policies from the same insurance provider often comes with bundle discounts. This applies to multiple individual policies and wrapping all the policy coverages into a broader product, such as overall film production insurance.
- Demonstrate competency – Insurance agencies base their prices, at least in part, on the level of risk that a studio presents. Productions that can prove they are following industry best practices for safety, such as regular crew training, may be able to reduce their costs.
- Use a trusted team – Some insurance agencies may offer rock-bottom prices, but that is because they do not have the industry experience or capability to provide good coverage. A trusted insurer may cost a little more upfront, but their service and protection save money in the long run when something goes wrong (and that’s when, not if).
Get High-Quality Film Insurance Customized to Your Production
Budgeting for a film production is one of the most challenging but essential parts of any studio’s work. Even the most aspiring projects may never get off the ground without strong insurance protection should something go wrong. The professionals at MFE Insurance can help you identify which coverages you need and how to fit them into the constraints of your budget. Contact MFE Insurance today to request a free quote!