Errors & omissions (E&O) insurance is crucial for anyone involved with creating and distributing creative property, including producers, writers, distributors, internet providers (ISPs), certain website owners, music publishers, record companies, book publishers, advertising agencies, and game developers.
Today, E&O policies are particularly necessary because it is extremely unlikely that anyone will distribute or broadcast a production without it. It is also important to protect the creating party from financial loss and from the cost of defending the claims. The payment of defense costs is one of the primary benefits of such a policy; legal costs to defend a lawsuit can exceed a million dollars, even in a winning case.
Ted Gerdes, principal of Gerdes Law, spent a number of years defending these types of claims and has been representing and interacting with E&O carriers for more than 20 years. Ted understands what makes a property insurable. He assists clients with obtaining errors and omissions insurance and through his experience can streamline the process by clearing the property and presenting it in a light favorable to underwriters. He can also help clients navigate more favorable policy terms for complex or higher risk projects.
What is E&O insurance?
- E&O insurance is a type of malpractice insurance protecting producers and publishers against claims of any errors or omissions made during the production a film or publication. Different policies are available depending on the type of project needing protection. Policy coverage can be limited to one individual work, such as a film or television project, but it can also cover a company's library or the output of a production company during a period of time.
What does it cover?
E&O policies differ between carriers, but generally cover most, if not all, of the following type of claims:
- Copyright infringement
- Unauthorized use of trademarks or titles
- Violation of personal rights, such as defamation, invasion of privacy, and unauthorized use of a person's name or likeness (right of publicity)
- Breach of implied contract for submission of ideas
- Newsgathering and related claims, such as, trespass, harassment and breach of confidentiality
Like other types of insurance, E&O policies have financial limits. Usually, there are two separate limits: one limits the payout for each claim and the other limits the total payout for all of the claims during the policy period. These policies also have time limits. Policies can be written either to cover only claims made during the policy's term, or to cover claims made at any time against events that occurred during the policy's term. Importantly, your coverage will not begin until you take out the policy. Therefore, the longer you wait to get the policy, the more risk you assume. If a claim arises before a policy is bound, it is excluded from coverage.
Article Alert: For a detailed primer on the topic of E&O Insurance for media, see the attached detailed article "Errors and Omission Insurance" that is a Chapter in the book Counseling Content Providers in the Digital Age: A Handbook for Lawyers, Copyright 2010, published by the New York State Bar Association.
Costs and procedures
E&O premiums vary from insurer to insurer and depend on the type of property and associated risk involved. Premium costs for docudramas, reality television shows, and nonfictional literary works tend to be higher than fictional properties. It can also depend on the applicant and whether that person or company has a history of being sued.
To obtain a policy, one must fill out a detailed application and provide all of the relevant information. The questions are specific about the work and how you have obtained all of the rights needed to produce and distribute it, as well as a list of general clearance procedures and warranties. You must also follow standard industry practices, which may not be specifically described in your policy agreement.
Article Alert: The E&O application process is demystified in "Cracking the Code on Your E&O Insurance Application"
The process of being approved for a policy often takes a number of weeks, and the cost of the premium must be worked into the project's budget. An attorney who has extensive experience handling E&O insurance matters can explain the relevant terms on your behalf and assist you with properly filling out the application. To discuss E&O insurance for your project and find out how we can assist you, contact Gerdes Law for a consultation.