An Insider’s Guide to Production Insurance with Adam Darragh

Welcome to On Production, where we dive into the fascinating world of film and entertainment through the eyes of those who make it happen. Today, we're joined by Adam Darragh, a seasoned expert in production insurance, actually here at Wrapbook. He has an incredibly diverse background spanning from film production to educating future filmmakers at LSU. And Adams brings a wealth of knowledge and experience not just in the world of production, but also production insurance. So today, he's going to help us unpack the intricacies of production insurance, and share insights from his journey in the industry. Adam, welcome to On Production.

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0:58  

Thank you for having me.

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1:01  

Well, Adam, the very first thing I want to ask is, what are some of the key factors that filmmakers should consider when budgeting for insurance, especially those working with tight budgets? Yeah,

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1:10  

so too often filmmakers wait until the very last minute to try to fit their insurance budget in, they'll come up with all of their stunts, how they're going to do their stunts, and then they go to try to get insurance for them, and they find that cost more than they budgeted for, or they're going to have to perform their stuff in a slightly different way to make it insurable. And if they brought their insurance broker in earlier in the process, there could have been a conversation where they could align their creative, you know, what's possible, budgetary wise and otherwise, and instead, they bring us into the very last moment, and, you know, maybe they go with a policy that's not covering them as much as they would like it to because or as they think they do, because they didn't have enough time to have that conversation. Or they wind up having to make some large creative decisions that they would rather not have had to make, if said, had a little bit more time. So that's the first thing that comes up. But we can go as deep into this as you want

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2:06  

Well. I think that we should go deeper, I think you have such a wellspring of information that's really helpful for filmmakers. How about we kind of break it into bits? Can you walk us through the process of assessing a production’s insurance needs? How does the nature of a product influence the type of coverage required?

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2:24  

Yeah, so first off, if we're talking about commercial or music, video, a documentary, a lot of those risks are pretty, pretty similar. So commercial, you'll get a crowd of people, and they'll be there for a day, and then it's done. A Doc is much longer. But you'll have a few people shooting regularly, web series the same, over a long span of time, the risk about washes out to about the same, we can usually cover those things on what's called a dice policy. It's an annual policy that covers all that documentary, industrial, commercial, educational music video work. So the first question I suppose I would ask is, what kind of projects do you do? Are there multiple projects? If so, what kind of projects are we talking about? And if it's those documentaries, commercials, music, videos, that sort of thing, we can go with the DICE policy, get one policy to cover all of that work. And usually, if you're doing three or more productions in a year, the dice policy winds up being the better buy, you get much higher coverage. And you can pay for this over a long time, as opposed to paying minimum premiums for every single production you have. So that's the first thing I ask. After that, if it's a feature film or TV series, we have to quote that a little bit differently, the risks are really unique, you have a lot of people on set, with a lot of expensive equipment for a chunk of time, back when I used to work on set, you know, five weeks would be a short movie. Office would be going a long time before it a long time after just have a lot more things at play. So we would quote that by itself. And you know, we bring in all sorts of different stuff. So of course, you're thinking stunts, you're thinking budget, you're thinking you have a really cool techno crane in the shot, and you need to make sure that it's all covered drones. But another thing that we're looking at is what is the cost per day. So if you're shooting a million dollar film in a week, you go down one day, that's a huge claim. And that's gonna limit the amount of insurance that will work on it. And that will also affect how much you're going to have to pay for insurance. Last thing I want to just name drop is errors and omissions policies. So if you do features and TV, you know this, it's required mostly for distribution and things like that. Professional Liability that is going to follow your film. DICE people can get it on an annual basis feature films TV, get it for a single project. I bring it up because everybody gets it at the end. Under the project, but the term is three years for a feature E and O policy. And so long as your phone debuts, and those three years, those risks are covered. So, folks intend to buy E&O, another wait until the end, when it would have covered them just the same and cost the same, and they knew they're gonna get it. And then if they have a script claim or something like that, during their production, their production shuts down, or they owe all this money. Because they didn't purchase E&O earlier. So that's just a shout out for most folks, if you're gonna have to buy in any way, buy an upfront when you're settling up the rest of your production insurance and get a little bit more coverage for no extra cost.

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5:43  

That’s a very good tip I had not ever heard that before. That makes a lot of sense. You know, Adam, you mentioned this a little bit. But stunts and special effects, obviously add an exciting element to a commercial or to films. But it also comes with increased risks. How should producers approach insurance for scenes involving higher risk? Or how should they just deal with stunts generally, when it comes to Risk and Insurance

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6:10  

I’ll get basic with this and talk about risk just in general, and I'd say be realistic about your risk. I've been surprised how many independent filmmakers based on their experience with insurance, they think maybe there's a single price for insurance. So when I come back with a realistic cost for the things that they're telling me they plan to do, it seems too high, because they thought insurance is always just a set fee. I had never thought this myself, but I've talked to enough people like that, that I wanted to bring it up. Another thing to keep in mind is you may do a feature film for $30,000 in your house, shot over a week. And then you're so successful with it, you get to remake it and you get $2 million. And filmmakers will come to me and they'll say why is this quote this high? You're ripping me off. My last policy costs me – you know, $5,000, when you're quoting me, 30 of the budget is so different, we're in a completely different ballpark now. And so I say Be realistic about your risk, I'd like to say, once you have a healthy budget insurance should be between one to 3% of your budget, the lower budget you are the bigger bite it's going to take because of minimum premiums. And risks are the same way. So we've just talked about general risk of production insurance and how it scales as budgets, get larger starts high value vehicles, things like this, increase your risk profile a little more, because if you're blowing something up, then you're going to have to make sure not just that you've got insurance to cover the buildings that might be affected by the blowing up, but the insurance company is going to want to know who's doing it. How experienced are they? You might even have to get on a risk control call with the insurance company to be able to, for them to ascertain how safe do we really think this is going to be. Some filmmakers when a student gets turned down, get really upset, understandably so. But sometimes the student gets turned down because an insurance company realizes this person doesn't have the level of expertise to perform this kind of stunt. It would be acceptable. If if he had a long list of credits, pulled proper permits all that stuff, an insurance company, they're trying to really watch out for you at the end of the day, so that if you have a loss, they're going to cover it just fine. And some of these risk control conversations we have with stunts are trying to make sure that you filmmaker, have all of your ducks in a row. So that yes, claims do happen. But just looking at all the facts laid out in front of us. It seems like this is going to be a safe undertaking, even though it will look really cool on camera.

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9:02  

Super insightful. I want to shift gears a little bit to a less or rather a more sad topic, which is insurance claims. You know, a claim is when terrible happens and insurance has to kick in. What are the most common types of claims you see in film production insurance and what can producers do to mitigate these risks, Adam?

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9:22  

Great question. The most common claim by far is auto physical damage. So cars getting damaged by other cars, cars getting damaged by stunts, a crew member laying back up for a little bit too far away hitting the hood of the car he's just trying to rest and putting a big dent in since the pandemic auto claims nationwide, not just production have gone way up because of computers and things in cars, inflation and unavailability of parts due to wars and things like that. These auto planes are so much more expensive than they used to be. So that's the number one thing You can mitigate it, like most claims that you can mitigate it by hiring good people that will audit physical damage, it's always a little different. So auto physical damage, the gold standard is to get a moving vehicle record, MVR, for anyone who's going to be driving for you. And you can get that from the drivers local DMV, you can pull it online, usually. And what that does, it shows you their driving history. And for the most part, in my experience, we're able to get a driver approved no problem. But I have had cases where we pulled the MVR. And there is a list of moving violations, the producer may or may not have been aware of that. And when you see that you realize, okay, maybe I want this person to be working with me. But they, I can't give them the keys as a driver. Another big thing I see is tossing the keys to an 18 year old PA not knowing anything about their driving history, and letting them be the driver. Most limbs that hit cars or mailboxes that are knocked down or parked cars that are hit tend to happen from these inexperienced young PAs. And I would ask a producer, yes, you obviously need them to do this work for. But is there a way that you can give the keys to a more experienced driver, maybe they're used to driving a box truck or whatever. And that would go a long way toward mitigating this most common risk. So that's out of physical damage. After that you get to equipment damage, location damage, you can deal with that by hiring competent people, a great locations department that treats the buildings well plays down on cardboard or whatever, make sure all the gaff tape is cleaned up all that stuff, you mitigate that by having good locations people will also set down rules and communicate them so that nothing in the house is damaged. Or wherever you are equipment, same thing hiring qualified people communicating well, so that, you know you're not rolling the dolly into a place where electric is trying to light when you have a collision. And then something breaks. Communication from the ad department on down as well as good professional people who know how to handle this gear is is the way you mitigate it. I'm gonna throw in one last thing, Enterprise Risk Management idea. The idea is sometimes in film we think of ourselves as, alright, I lead the department, I'm grips, I'm electric, I'm catering. I'm here and whatever. And we think of that we silo ourselves into these separate departments. And so if there's a hold up, we say, oh, electric, they're holding us up camera, they're holding us up. That is certainly that is true sometimes. But something I want you to think about is alright, so if camera holds you up, it's gonna hold up the whole production. We don't get to go home because of that. And if we did something that held camera up, and we're a part of that, too. And if we are all realizing like it's not my role as an ad to go and pick up a camera and move it? Absolutely not. But it is my role to maybe say, alright, we're doing a move. Looks like cameras having a little bit of trouble wrapping out. I've got two free pas from the ad department grips got a free grip, we can pitch and say hey, what can we do, we can't touch cameras, maybe we could grab your tent. If we can. If we can help each other and also communicate really well, we can sometimes make sure that that whole day goes much more safely and smoothly. Because we realize a loss to one department is going to in some way be a loss to all of us, or a loss to the final product that we're working so hard for. That

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13:56  

is such such insightful information. Adam, a little bit more on this subject related to special coverage. So for productions involving really unique elements like underwater scenes, animals, or international locations, what special types of insurance coverage should producers consider?

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14:15  

Yeah, so on things like animals that's declaring it to your production package or to your insurance policy, the main insurance policy for your feature, DICE policy, whatever. Once you go a little bit more broad than that you do get into the world of specialized coverages. So drone, for example, is really common, but drone laws are really complex, and they keep changing. So we often might go to a separate kind of drone provider for underwater. Or we might have to go to a movie boat policy which is a policy that is written very specifically with nautical risks and types of boats types of water activities in included and so We would have to, instead of doing that as part of your package, we would go out and get that separate course to the filmmaker, they know that they had something else to pay, but all they really know at the end of the day is that they're properly covered. So a lot of that is a broker you trust, working behind the scenes to make sure all the risks that filmmaker brace up. And then the last one, you mentioned foreign coverage, a lot of policies, the liability portion, so auto liability and in general liability, a lot of those kind of stop at the borders of the US and Canada. So if you're going to do a production, beyond that, go into Europe, Africa, wherever we might get you a foreign package policy to cover you there. Some filmmakers will have a will have an entity, say in Europe, and so they get a European policy. But I'm speaking of a US based company, going and doing a scene in Canada fine, it's probably going to be just fine. Put onto your DICE policy, feature policy, whatever. But if you're going to be on that, Mexico, Europe, etc, we get you that foreign package policy to cover you abroad. I'll give you one last little bit on the foreign Package Policy. So you're used to in the US probably GL, auto, inland marine or production package, that's your equipment, workers comp, Once you get abroad, some of the risks are the same, and then it adds some other ones. So if you're going to Mexico right now, on that foreign Package Policy, you would find kidnap and Ransom listed there. Why? Because you’re in a film shoot, you get a lot of gear, you are conspicuous. And there are problems throughout that country right now. And not always in the most predictable places. And so a foreign Package Policy is going to have kidnap and ransom, they're going to have travel accident and sickness, which is beyond workers comp. Because sometimes when you're not working, but you're in another country for work, you get sick, or something happens. And it behooves the production to have some coverage in place to get you care, even though it is not workers comp, because you weren't working in the can get you back to the US if needed. And all these things last day, all these things can be separate as well. So let's say you're going with a major star to Veracruz in Mexico or Venezuela someplace, please don't take a star Venezuela at this time. But say that happened. And you know, you're going to want some extra coverage for them. So you might get a separate kidnap and Ransom policy, which much larger to cover those folks. Although I'll say the last thing, generally, it's not the star that's at risk. It is the grip who's very tired, and is coming home and is separate from the group. And that's where do you see those sorts of claims?

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17:55  

Really insightful. You know, every independent filmmaker especially wants to know if there are some strategies for managing insurance costs without compromising essential coverage. Do you have any thoughts there?

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18:07  

That's great. I think being realistic about cost from the beginning is very helpful. Because of you. First thing I look at when I break down a budget for an independent film is of course what the whole budget is, but then I see what they put as the budget for insurance. If it's super, super low, I know they're not realistic about what these sorts of things cost, I would say, plan one to 3%, I'd probably say on your initial budget plan 3%. Hopefully it will be lower than that. But then you've got something to work with. And you're not having to make sacrifices later on when you get a price that is appropriate to what you do. Another way to manage costs, is every relationship with a broker you trust, there are a few key markets, they all there are only like six major film markets. And not every market wants to quote, a certain budget of film. So when you're 1-5 million, there are some there are like two places that will quote you three, maybe once you get over 10. Most people want to coat you. You don't need to quote all over the market. It's a lot of work. It's a whole lot of follow up questions, but you want to make sure you get your good solid quote from a provider that is well rated and respectable and known for having good claims service for and coverage as well. And by working with a broker that you trust, you can find that also if you have a previous relationship with this broker, that broker is going to have an idea of what rates are workable and what aren't. And you can let the broker know like, Hey, this is really high. I didn't expect that. Maybe there's some changes that we can make to deductibles. Maybe there's a term or condition that we could put in place that maybe would get it down a little bit and that You as the filmmaker would be comfortable with. So rather than just going all over the market and sending your stuff out to everyone, part of the problem with that is often put different information in these different applications. And so you're getting quotes that are apples and oranges, not apples to apples. Are they finding somebody that you feel good about you feel like you can ask questions to, and that you feel like understands what you're trying to do. You can work with someone like that to maybe make some changes, to get the price down, but also still make you comfortable with the sort of risks that you're taking on yourself.

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20:36  

That's so insightful. As always, Adam, thank you for joining me on On Production and sharing just a small bit of your incredible expertise on production insurance. Well, thank you very much for having me, Cam. Awesome. Talk to you later. All right.