Get to know the audiovisual E&O features in the Brazilian market.
Hello!
Today, on our #MondayBlog, we're going to continue our conversation about E&O insurance and we're going to delve into the technicalities of this very important product for audiovisual productions.
Although this post is a little more technical than usual, we at Prospecto will try to make this reading simple and pleasant.
Let's say you're going to take out your first E&O policy, so there are a few things you need to know:
1. What is the coverage period of an E&O insurance?
The initial term of any Errors and Omissions insurance is 12 months, starting from the date of effective purchase of the product. But, there is the possibility of hiring up to 60 months of validity. Within this period, any triggering event, that is, harmful act, that may generate a claim will be covered in your policy.
2. Is it possible to extend my term?
Actually yes. By renewing the policy. For the audiovisual product, what also exists is the possibility of purchasing a supplementary term, which simply means that you are extending your coverage for an extra period, which generally in Brazil starts with another 12 months of coverage, starting immediately after the end of the period. its initial term.
Some insurers offer a supplementary term of up to 36 months!
Regarding the complementation of the coverage term, there is also the possibility of purchasing a supplementary term, which would be the extension of the extension, so to speak. This supplementation can take place for up to 24 months after the end of the complementary period.
But pay close attention, E&O insurance is the basis of claims. In other words, the damage must occur within the term of the insurance, but the claim may occur in any period within the term or during the supplementary and supplementary term.
In other words, what if my movie has a complaint 3 years after release? As long as the damage occurred during the term of the insurance, there is no problem. Think of these additional deadlines as a way to avoid getting sprung from lawsuits years after your work has been released.
Some may feel that this entire term extension is overkill. But the truth is that some international distributors have requested terms of up to 50 years in E&O coverage.
We at Prospecto are very interested in seeing how our insurance market will react to these new demands, especially with our legislation limiting the deadlines for proceedings in Civil Liability.
3. What are the coverages present in an E&O insurance?
Brazilian insurers currently have around 20 coverages that can be taken out in their E&O insurance.
The Brazilian market currently has 04 large insurance companies that accept the risk of Errors and Omissions for the audiovisual industry, but not all of them have the same willingness to accept risks. Therefore, not all will offer you the 20 existing coverages.
Among these coverages offered we have physical damage and material damage, which is something very new in the Brazilian market, note that 4 years ago there was no possibility of contracting this coverage here in Brazil.
Very important, but usual, coverages are: financial loss, pain and suffering, attorney's fees and procedural costs, dishonest acts of employees, breach of contract, libel, libel and defamation, expenses with image crisis, intellectual property rights, breach of confidentiality professional, violation of the author's copyright or moral right, infringement of trademarks, names, symbols, titles, brands and logos, invasion of the right of privacy of a living or dead person, among many others.
4. What is MLI?
MLI is an acronym for the term Maximum Limit of Indemnity. In layman's terms, it is the maximum amount of coverage to be indemnified in the event of a claim. Normally in E&O, this maximum limit is in the millions of reais, as everyone knows that civil liability lawsuits can be costly and long in Brazil, and damages from intellectual violations can be very expensive for the producer.
We usually see policies with initial values of 1 million reais. If your contract is with a foreign company, they usually ask for a minimum amount of 1 million dollars, which today would amount to around 5 million reais.
However, the insurer may agree to cover 100% of the contracted MLI only for some coverages and limit this amount to 10% in other situations. Sometimes, depending on the risk, the insurer may offer very low amounts for some specific risks in your policy, so keep an eye out.
5. Is there a deductible for E&O insurance?
In error and omission insurance, depending on the risk, a fixed deductible or porcentage deductible. applies, that is, the insured's mandatory participation in the risk. This means that in the event of a claim, the insured will participate in the loss in any E&O insurance.
In case you don't quite understand how this type of franchise works, take a look at our post where we explain this type of scenario with examples.
Click here to learn more!
6. What is the scope of my coverage?
National, but it can be extended to the international territory or only to Latin American countries.
Even with the contracting of the extension of the coverage scope, some insurers limit the jurisdiction of any dispute or the insured's domicile.
And that has a good explanation, civil liability is directly governed by the legislation of each country. Matters are resolved in courts, either in the form of an agreement between the parties, or by court decisions. Thus, the Brazilian producer will be liable for damages and claims filed in Brazil, with the current Brazilian legislation.
Did you know that in the United States, for example, in addition to the defendant in RC paying the damage to the claimant, it is customary for the judge to penalize the producer with an extra fine, just because the claim happened? This is one of the reasons why some insurers in Brazil and other countries rarely accept to extend RC coverage to the American nation!
7. Is E&O insurance expensive?
Cheap, it sure isn't. But at this point it's important to consider the following, how much can you lose?
First, know that the way the audiovisual market is evolving, it will be practically impossible to distribute, release and market your film without this insurance contract.
There are contractors who require the existence of an E&O policy in force even before the start of pre-production.
Second, incomplete and cheap insurance can become a nightmare for years in your life.
Third, we at Prospecto are willing to explain in detail each coverage, deductibles and amounts so that you can make the right decision for your production.
We know there is a lot more to be said about this subject. And, of course, at another time we will break down each coverage, but we believe that on this basis, it will be possible to identify what is really important to know before taking out this insurance.
In the next #MondayBlog we will talk about Robbery and Theft, and why they differ so much in the insurance market.
An excellent week, lovers!
Prospecto Seguros
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Errors and Omissions
Equipments
Audiovisual Production
Drones
Life and Personal Accidents