This article was written by Frankfurt Kurnit for their Entertainment Law Alert on June 1, 2020. It is published here with permission from FKKS.

As states begin to gradually reopen and networks held virtual upfronts, the entertainment industry is contemplating both when and how production will be able to resume. Studio executives, union representatives and epidemiologists are meeting to develop new protocols that will permit production to restart safely.

A key prerequisite for resuming production  is the availability of insurance. Even large studios with the capacity to self-insure are daunted by the risk, and smaller production companies cannot proceed without coverage. Insurance carriers – who are currently facing an estimated $400 million in claims arising from the COVID-19 pandemic — aren’t writing new policies that will cover new losses from COVID-19 because of the unknown scope of liability.

Insurance carriers and production executives believe that the only solution is for the federal government to provide support for insurers along the lines of what was done after 9/11 in the Terrorism Risk Insurance Act. On May 26th, Representative Carolyn Maloney (D – N.Y.) introduced the Pandemic Risk Insurance Act of 2020 — a federal bill that would provide a government backstop for three key production insurance policies: i) civil authority (which applies when a government order limits access to property); ii) imminent peril (which covers loss incurred in mitigating or avoiding an immediate risk to life or property) and iii) cast insurance (which provides coverage for extra expense incurred in completing principal photography after delays caused by talent illness, death or injury).

The bill would require insurers to pay the first 5% of loss, with the remainder covered by the federal government, up to a cap of $750 billion.

The bill would also benefit other industries whose operations may depend on the availability of business interruption insurance policies that cover pandemics.

If the legislation passes, any post-COVID insurance policies will almost certainly require that producers comply with an extensive set of safety precautions that may go beyond what is required by the relevant governmental authorities or the standards set by industry working groups. We are closely monitoring the new legislation and other COVID-19-related legal developments.

If you have any questions about film production insurance, or other entertainment law matters, please contact Lisa E. Davis at 212.826.5530 or ldavis@fkks.com, or any other member of the Frankfurt Kurnit Entertainment Group.

The contents of this blog, and the posting and viewing of the information on this website, should not be construed as, and should not be relied upon for, legal or tax advice in any particular circumstance or fact situation. By reposting this article, Extreme Reach is not providing tax or legal advice, further, the information presented may not reflect the most current developments. No action should be taken in reliance on the information contained on this blog. Please contact a lawyer or other trusted advisor to provide specific advice related to your circumstances. Thank you.

Recommended Posts