About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A FILM PRODUCTION COMPANY
Example 1: Some heavy equipment crashes on the set and lands on a passerby who wandered away from his studio tour. His leg is crushed, and he is rushed to a hospital. If liable for the incident, your company would probably have coverage through general liability insurance for the resulting damages or for a settlement reached.
Example 2: During a dangerous scene featuring a contained fire outbreak, the flames get out of control and end up destroying a small local bookstore. In this case, your business would likely receive coverage for the bookstore’s sustained damages through a general liability policy.
Example 3: Your caterers provide food for the wrap-up party after filming completes. Some actors and studio workers bring their friends and family, but many of them get sick after eating the food. The caterers made a major mistake and provided spoiled food to the party. If held liable for this incident in court, general liability insurance would probably cover some amount of the resulting damages as well as any settlements reached.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
COST OF GENERAL LIABILITY INSURANCE
The average film production company in America spends between $300-$600 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
OTHER TYPES OF COVERAGE FILM PRODUCTION COMPANIES NEED
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all film production companies should obtain:
Commercial Property Insurance
To a film production company, equipment is everything. Your cameras, set pieces, computers, costumes, cosmetic supplies, and more are vital material assets. If these assets are compromised by a force of nature like fire or violent weather, it can spell disaster for an uninsured film production company. Don’t get caught off guard by sudden catastrophes. Commercial property insurance helps to cover losses sustained to owned commercial real estate, equipment, and other supplies that support your business. This policy is non-negotiable for truly serious businesses.
Commercial Auto Insurance
A film production company will require some number of motor vehicles for transportation of equipment and personnel to new locations for shooting. For that matter, your automobiles might make it into a scene when vehicles are called for! Any motor vehicle that drives on public roads is legally required to be insured. Commercial auto insurance will help cover accidents that occur on the road, whether you’re actively filming a car chase or just picking up lunch for the artists and crew.
Workers' Compensation Insurance
Your film production company will thrive on the talent and competence of its employees. Any part-time or full-time employees (not including independent contractors) must be offered workers’ compensation as a matter of law. Any on-the-job accidents that take place are potentially eligible for coverage under a good compensation policy, and it will help your workers to rest easy in the event of injuries sustained in the line of work. Disability and death benefits are also offered through this policy, providing coverage for not only employees but their families as well.
TYPES OF COVERAGE SOME FILM PRODUCTION COMPANIES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your film production company may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Commercial Umbrella Insurance
You never know what might happen on a given day at work, but this is especially true for workers in a film production company. Commercial umbrella insurance is an add-on policy that supplements maximized insurance, adding a new range of coverage for businesses looking to cover all their bases. Working with such a diverse array of people and equipment, your film production company can’t be too careful about which potential threats it leaves uncovered. Commercial umbrella insurance can be a major safety net for businesses.
ADDITIONAL STEPS TO PROTECT YOUR BUSINESS
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.