23 Jan Civil Authority Coverage and Foreign Production Insurance: Overlaps and Differences

In a recent blog article, Barrow Group discussed the importance of foreign production insurance. This article discusses the benefits of civil authority coverage. Before we go into these benefits. Let’s talk about the differences in these coverages:

There can be overlap between civil authority coverage and foreign production insurance in the film and TV industry, but they serve distinct purposes and are tailored to specific risks:

Civil Authority Coverage

This type of coverage typically falls under business interruption insurance and is designed to compensate for losses when access to filming locations is restricted by a government authority. Examples include:

• Road closures affecting access to a set.
• Evacuation orders due to natural disasters or civil unrest.
• Prohibitions on filming due to safety concerns or emergencies.

Foreign Production Insurance

This is a specialized policy for productions happening outside the home country. It typically includes:

• General Liability: Covers legal liability for injuries or property damage.
• Equipment Coverage: Protects cameras, lighting, and other gear.
• Workers’ Compensation: Covers cast and crew injuries abroad.
• Political Risk Insurance: Covers losses due to government actions like expropriation or nationalization.
• Emergency Evacuation: Covers costs for political or natural disaster evacuations.

Overlap Areas

The overlap arises when a foreign production faces disruptions due to civil authority actions in the host country. For example:

1. If a government shuts down a location due to political unrest, civil authority coverage might compensate for lost production time.
2. If the unrest leads to a mandatory evacuation, foreign production insurance might step in for logistical and safety expenses.
3. Both policies might apply in tandem if a foreign government imposes access restrictions that delay production.

Key Considerations

• Policy Wording: Ensure both policies explicitly cover the scenarios relevant to your production.
• Geographical Scope: Foreign production insurance usually accounts for civil disturbances abroad, but the extent depends on the insurer and policy terms.
• Coordination: Work with brokers familiar with both domestic and international production to avoid gaps or redundancies.

Further Benefits of Civil Authority Coverage

Film and TV producers can benefit from civil authority coverage as part of their insurance portfolio because it helps mitigate financial losses caused by unexpected disruptions due to actions taken by government or civil authorities. Here’s how it can be specifically relevant to them:

1. Production Delays Due to Government Orders

• Civil authority coverage comes into play when a government or public authority orders access to a location to be restricted, often due to safety concerns, natural disasters, public health emergencies, or security threats. For film and TV producers, these restrictions can delay production schedules, causing significant financial losses.
• Example: If a wildfire leads to an evacuation order for a filming location, civil authority coverage could reimburse the producers for additional expenses incurred or lost revenues due to the interruption.

2. Loss of Access to Key Locations

• Many productions rely on specific locations, often chosen for their unique qualities that are difficult to replicate. If these locations are made inaccessible due to government-mandated closures, producers can face costly disruptions.
• Example: A government-imposed quarantine zone blocks access to a city where filming is scheduled. The coverage can help offset the costs of rescheduling or moving production.

3. Protection Against Revenue Loss

• Delays caused by civil authority actions can affect the ability to meet deadlines for delivering content to distributors, networks, or streaming platforms. This can lead to contractual penalties or lost revenue opportunities.
• Civil authority coverage can compensate for these losses, ensuring the financial stability of the production.

4. Covers Additional Expenses

• Beyond lost revenue, producers might face extra costs to relocate, rebook equipment, or pay additional wages to the cast and crew during downtime. Civil authority coverage can provide financial relief for these expenses.
• Example: A sudden government curfew requires the production to halt night shoots. The coverage could help pay for rescheduled shoots or related costs.

5. Pandemic and Public Health Emergencies

• Recent events like COVID-19 highlighted the importance of civil authority coverage for the entertainment industry. Shutdowns or restrictions directly impacted filming schedules and access to venues, leading to significant losses. Civil authority coverage may apply in some of these scenarios.

For film and TV producers, where delays and disruptions can snowball into significant financial burdens, civil authority coverage acts as a safety net, ensuring they can continue to operate despite unforeseen government actions.

Terrorist Attack:  How does civil authority coverage protect producers in the event of a shutdown due to a terrorist attack

Civil authority coverage can protect film and TV producers in the event of a shutdown due to a terrorist attack by helping mitigate financial losses and covering expenses that arise when government or civil authorities restrict access to locations for safety reasons. Here’s how it applies:

1. Reimbursement for Production Delays
• Terrorist attacks often lead to shutdowns or restricted access to areas where filming is taking place due to safety concerns or investigations. Civil authority coverage helps cover the costs incurred by the halt in production.
• Example: If a terrorist attack occurs near a production site and authorities close off the area, the coverage can compensate for the delay costs, including lost time, wages, and idle equipment rental fees.

2. Compensation for Revenue Loss
• Producers may face missed deadlines or delivery obligations with distributors, streaming platforms, or networks due to the interruption. This could result in penalties or loss of anticipated revenue. Civil authority coverage can compensate for these losses, ensuring the producer’s financial health is not jeopardized.
• Example: A TV series scheduled for release is delayed because filming is paused due to a nearby attack. Civil authority coverage can help recover some of the lost income.

3. Coverage for Additional Costs
• Shutdowns or restricted access often require relocating production to alternative sites or rescheduling shoots, which involves unforeseen expenses. Civil authority coverage can cover these additional costs.
• Example: A terrorist attack leads to the closure of a city block being used for filming. The production must quickly relocate to a new site, incurring extra costs for permits, set transport, and lodging for the crew. Civil authority coverage can help offset these costs.

4. Continuity During Security Lockdowns
• Following a terrorist attack, authorities may impose prolonged curfews or security lockdowns, making it impossible to continue production for weeks or even months. Civil authority coverage can provide financial relief during this downtime.
• Example: A long-term lockdown affects an entire studio lot where production was scheduled. The coverage can help the producer maintain their commitments despite the enforced shutdown.

5. Minimized Financial Risk
• Terrorist attacks create ripple effects on public safety and perception, which might discourage cast and crew from returning to affected areas. Civil authority coverage ensures that producers are not left solely bearing the costs of such unforeseen disruptions.
• Example: If access to a filming location is permanently restricted due to damage or safety concerns after an attack, the coverage can help with the costs of scouting, securing, and transitioning to a new location.

6. Terrorism Coverage Interplay
• Many insurance policies include terrorism-specific clauses. Civil authority coverage can work in conjunction with these provisions, addressing shutdowns caused by government actions while terrorism coverage addresses property damage or specific liabilities resulting from the attack.

Why It’s Crucial:
For film and TV producers, any delay or shutdown can cascade into significant financial and contractual issues. A terrorist attack not only disrupts logistics but also poses safety and reputational challenges, making civil authority coverage an essential safeguard for maintaining continuity and minimizing financial fallout.