How does the Extra Costs coverage work?
Series - Meet the Members of the Powerful Triad of Audiovisual Insurance.
Hello!
It's great to have you here, in another #MondayBlog.
Are you ready to finish our series “Meet the members of the powerful Triad of Audiovisual Insurance”? Over the past few weeks we've been talking about the No-Show and Support coverages, and today to wrap up, we're going to explain the Extra Costs coverage, the last member of this triad.
All coverages in this triad are directly related to the budget amount of your project, but the Extra Expenses coverage, unlike the other two, does not need to be contracted at 100% of the budget amount. In fact, it is customary for some insurance companies to have this amount limited to around 20 to 25% of the total audiovisual production budget.
What is Extra Costs coverage?
When we talk about insurance with multi-risk features, it is important to think of a puzzle, each piece is important to complete the picture. In audiovisual insurance, it works exactly like that, each coverage offered increases its financial protection, and when all relevant coverages are contracted, the insured has his/her risk 100% protected.
With this scenario in mind, it is possible to understand what the Extra Costs coverage is capable of doing, it complements a policyholder's need, which the other coverages exclude. Generally speaking, this coverage exists to help with the extra costs generated as a result of postponement or interruption of filming as a direct and exclusive consequence of damage or destruction to property or facilities used, or to be used, that occurred during the period of coverage.
But, the insurance market is always evolving, and today it is possible to use the coverage of extra expenses in other situations, with the purchase of additional coverage, which together make this coverage a powerful part of your insurance policy!
Under what conditions can this coverage be triggered?
You already know that the coverage exists for situations where your filming location is unusable as a result of damage or destruction to that location. So, it's simple to understand its function.
Imagine you've rented a house, and in the middle of shooting, a pipe bursts and floods the place. Note that the pipe burst without any action from you or your team, that is, it was something totally external to you.
If you have this coverage in your policy, you can start looking for another similar location to go back to filming and the costs related to the new location (rent) and consequent extra costs due to this change of location, may be borne by the insurer.
Important care with your project related to extra costs
It is important to emphasize that not every problem or damage to your filming location will be covered and compensated for the coverage of extra expenses. It is always a good practice to check exclusions from this coverage with your broker, in order to see what likely situations could happen based on your roadmap.
Prospecto has the habit of investing time with our clients analyzing the script and the coverages, and consultingly explain which are the essential coverages for their production.
There is a very interesting case that occurred a few years ago. In the middle of filming, the director decided to put a jet ski in the pool of the rented place to make a scene. Needless to say, the pool was severely damaged, and filming ended up being halted.
The insured did not fully understand the coverage of extra expenses, and thought that this situation would be covered. It wasn't.
The damage existed and the location was unusable, but the damage was not accidental. The director didn't think straight, but everyone knows that jet skis weren't created for use in swimming pools.
And the whole situation turned into a liability nightmare, but that's a topic for another #MondayBlog.
Additional Coverage for Extra Costs
Do you know all those situations excluded in Extra Costs? You can purchase some of them as additional coverage directly linked to the extra expenses.
Let's take a look at some of these additional coverages today, and remember, buying coverage always adds an additional cost to the final amount of your insurance, but in some cases it turns out to be the wiser option.
Some of the additional coverages are:
- Strike and Civil Protest;
- Loss of Electricity Supply;
- Loss of supply of utilities;
- Civil Authority;
- Civil Authority – Except Volcanic Activity;
- Mechanical failure;
- Access Impediment;
- Own Vice/Latent Defect;
- Confiscation and/or Quarantine – Civil Authority;
- Crisis Event;
- Animals;
- Imminent Risk;
- Terrorism; and
- Fine.
Get ready, because soon we will bring a post explaining the usefulness of each of these mentioned coverages. We don't want to overload you with information today.
But believe me, these covers are fantastic!
Some examples of claims:
Can you imagine arriving to film and finding your entire film set collapsed? Yeah, 266,000 euros were paid to change location and redo the entire setting for filming.
In another case, the production had to run after the news that the stadium in which they would be filming was no longer available. The extra cost to rent another location urgently was 532 thousand euros, which was duly paid by the insurance company.
See how interesting this coverage is? It perfectly covers blank spaces left by the other covers, especially with the use of the additional ones.
Not all insurance companies in Brazil freely offer these additional coverages for purchase. But don't worry, Prospecto has experience in negotiating exclusion purchases with insurance companies, using particular clauses.
In statistical terms, the coverage of Extra Costs represents around 18% of the value of the cost of its production, for this reason some insurance companies limit its value to up to 25% of the total cost of the project, as mentioned at the beginning of this article.
It tends to be activated with a frequency of 10%, that is, 1 in 10 productions have some kind of problem with their locations that translate into the need to spend on new locations to film.
We believe this number demonstrates the importance of contracting this powerful coverage.
We hope you enjoyed our special series on the powerful triad of audiovisual productions insurance.
We're waiting for you for the next #MondayBlog!
Have a great week, lovers!
Prospecto Seguros
Learn more:
Audiovisual Producion
Drones
Equipments
Errors and Omissions
Life and Personal Accidents