ISO Film Coverage Form

ISO FILM COVERAGE FORM ANALYSIS

(August 2018)

 

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INTRODUCTION

The Insurance Services Office (ISO) Film Coverage Form insures exposed motion picture film and the sound recordings that go with the film. This property must be either owned by the named insured, or has been placed in the named insured’s care, custody, or control. Coverage is limited to only the production that is listed on the declarations.

ELIGIBILITY

Any operation that commercially produces motion pictures or videotapes is eligible.  

POLICY CONSTRUCTION

ISO Film Coverage requires at least these five forms:

Related Article: IL 00 17–Common Policy Conditions

Related Article: CM 00 01–Commercial Inland Marine Conditions

Note: Film coverage may be issued as a stand-alone, monoline inland marine policy or as part of a commercial package policy.

CM DS 07–ADVISORY FILM DECLARATIONS

CM DS 07–Advisory Film Declarations contains the following information:

Policy Number

The policy number is entered in the space provided.

Effective Date

The effective date of coverage is entered in the space provided.

Premium for This Coverage Form

The premium for Film Coverage is entered in the space provided.

Limits of Insurance

The name of each production and its limit of insurance must be entered in the spaces provided.

Deductible

The deductible is $500 unless a different amount is entered in the space provided.

Coinsurance

A coinsurance percentage or the words “No Coinsurance” must be entered in the space provided. The coinsurance percentage is 80% unless a different percentage is entered in the space provided. Coverage can also be provided on a monthly reporting basis. In that case, an entry in this area is not required.

Rates and Premiums

Coverage can be written on a reporting basis or a non-reporting basis.

Special Provisions

Any special provisions are entered in the space provided.

 

Example of properly recorded motion picture film

CM 00 45–FILM COVERAGE FORM ANALYSIS

Note: This analysis is of the 01 13 edition. Changes from the 03 10 edition are in bold print.

Introduction

CM 00 45 opens by stating that certain provisions restrict coverage and encourages the named insured to carefully read the policy to understand what is covered, what is not covered, and to determine its rights and duties. It highlights that the insurance company uses the terms you and your to refer to the named insured that is shown on the declarations and the terms we, us, and our to refer to the insurance company that provides coverage.

A. Coverage

The insurance company pays for direct physical loss or damage to covered property from a covered cause of loss.

1. Covered Property

 

The following property is covered:

a. Exposed motion picture film and its sound recordings

b. Magnetic or videotape and its sound recordings but only if the tape has been properly recorded. Tape is not considered properly recorded unless it has been replayed and checked.

Note: This coverage form provides very narrow coverage. Motion picture film production requires that peripheral and related parts and equipment be insured under other coverage forms and policies, such as the ISO Commercial Articles Coverage Form that insures cameras and related equipment and accessories.

Related Article: ISO Commercial Articles Coverage Form

2. Property Not Covered

There is no coverage for the following property:

a. Cut-outs

This term is not defined and is not a common film production term. A common definition is that these are things removed, cut out, and eliminated from something else. It could also mean the parts of the film removed in editing.

b. Unused footage

This term is also not defined. It could be referring to the footage that is filmed but that is not used in the final production of a film. This could be subject to interpretation because of how common outtakes have become part of the movie watching experience.

c. Positive prints or films

This term is not defined. A common definition is that these are prints where the light and the dark areas appear as in the original. This could mean a “daily” produced from a negative so that a director can view the day's shooting.

d. Library stock

This term is not defined. A common definition is that these are stored collections of property. Questions could arise with respect to when the negative film moves from active stock to library stock.

e. Contraband. These are goods that are illegal to possess or that are legal but are in the course of illegal transportation.

3. Covered Causes of Loss

The covered causes of loss under this policy is direct physical loss or damage to the named insured's covered property. The only exceptions are those causes of loss that are listed and described in Section B.  Exclusions.

4. Additional Coverage–Collapse

Only abrupt collapse is covered under this coverage. What abrupt collapse is and is not is described below.

a. As used in this coverage, abrupt collapse means that the building or part of the building must abruptly fall down or cave in. As a result of such falling down or caving in, the building or part of the building cannot be occupied for its intended purpose.

b. Payment for such abrupt collapse as described in paragraph item a. is for only direct physical damage to the covered property that is inside the building. However, payment is made only if one or more of the following cause the collapse:

·         Hidden decay. This applies only if the insured was not aware of the hidden decay prior to the collapse.

·         Hidden insect or vermin damage. This applies only if the insured was not aware of the hidden insect or vermin damage prior to the collapse.

·         Defective construction material or construction methods. This applies only if the collapse occurs after a building has been built, remodeled, or renovated and depends on one of the following contributing to the collapse:

o    Hidden decay or hidden insect or vermin damage as described above

o    One or more of any of the following listed causes of loss. However, loss by them applies only if they are insured against in this coverage form and only to the manner in which they are. Fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing devices, sinkhole collapse, volcanic action, breakage of building glass, falling objects, weight of ice, sleet, or snow, water damage, and earthquake are the causes of loss.

o    Weight of people or personal property

o    Weight of rain that accumulates on a roof

c. While this is additional coverage, it does not increase the coverage form's limits of insurance.

B. Exclusions

1. Primary Exclusions

The causes of loss in this exclusion do not apply to loss or damage caused directly, indirectly, or in any sequence in a chain of events that contribute to the loss. Exceptions to the chain of events condition are stated in the specific exclusion subpart. Coverage form wording emphasizes that coverage for any loss event described in these exclusions does not apply even if the event is widespread.

a. Governmental Action

Coverage does not apply if the government seizes or destroys property. This exclusion has an exception. Coverage applies to loss or damage due to such ordered acts of destruction at the time of a fire in order to prevent the fire's spread. The exception applies only if the insurance provided by this coverage form covers the fire.

b. Nuclear Hazard

There is no coverage for loss or damage for anything related to nuclear hazards. Reactions, radiation, and contamination are not covered. This exclusion has an exception. There is coverage if the nuclear reaction, radiation, or radioactive contamination results in a fire. The exception applies only if the insurance provided by this coverage form covers the fire.

c. War and Military Action

This exclusion lists three specific warlike activities that are excluded.

Any government action taken to respond to such actions is also considered war.

2. Secondary Exclusions

There is no coverage for loss or damage caused by the following exclusions. Note that the lead-in language is not as strong or inclusive for these exclusions as the language in 1. Broad Exclusions.

Editorial note: ISO does not give titles to these exclusions. To assist in the analysis, we have provided a title to help identify the exclusion’s main intent.

a. Delay, Loss of Use, and Loss of Market

Coverage under this form is direct damage coverage. Therefore delay, loss of use, loss of market, or any other consequential loss is not covered.

b. Deterioration, Atmospheric Dampness, or Changes in Temperature

Film is particularly sensitive to these causes so damage due to them is part of the cost of doing business. Appropriate loss prevention methods should be taken to protect the film because there will be no coverage under this coverage form.

c. Dishonest or Criminal Acts (01 13 changes)

There is no coverage for loss or damage that is due to dishonest or criminal acts (including theft) from any of the following:

(1) Acts that the named insured, its partners, employees, directors, trustees, authorized representatives or managers and members of a limited liability company commit. This also includes such acts that leased workers and temporary employees commit.

(2) Acts of managers or members of a limited liability company, if the named insured is a limited liability company

(3) Acts by anyone with an interest in the property, their employees, or their authorized representatives. This also includes such acts that their leased workers and temporary employees commit.

Note: This edition removes item (4) in the previous edition that addressed others entrusted with property for any reason. It is re-introduced in newly added exclusion k.

This exclusion applies whether the persons act alone or in collusion with others or if the acts occur during regular working hours.

This exclusion does not apply to acts of destruction by the named insured’s employees, leased workers, or temporary workers. However, loss due to theft of covered property by employees, leased workers, or temporary workers is excluded.

d. Exposure of Negative Film to Light

Negative film is destroyed when it is exposed to light. Such loss or damage is another cost of doing business type loss that is not a part of this coverage form.

 

Example: Fred's Filmworks is shooting a documentary about caves and much of the filming is done in actual wild caves. After a day of shooting, the equipment is removed from the cave but is mishandled and inadvertently exposed to the bright sunlight. The exposed film is completely ruined and must be re-shot. This coverage form will not pay for the re-shoot or the cost of the damaged film.

 

e. Use of Developing Chemicals

When loss or damage is caused by or is the result of a chemical to develop film there is no coverage.

 

Example: Fred has better luck the next day, at least for a while, and gets the film back to the lab safely. However, the technician mixes and uses the wrong solution of developing chemicals and, while not completely ruined, the film quality is such that it cannot be used. This is another loss that is not covered, and Fred prepares himself for another day of filming in the cave as he tallies up his uninsured losses.

 

f. Developing, Cutting, Printing of Film, or Other Laboratory Work

Loss or damage during the actual processing of the film through developing, cutting, printing and any other aspect of putting together a finished film project, is not covered.

Note: The term “other laboratory work” is used and it is not defined. It is not a common term in film production so could be difficult to enforce as an exclusion.  

 

Example: Day three goes very well. The film is shot quickly, reaches the lab safely, and is developed properly. The editors pore over the tape and select and mark the portions they want to keep. Once again, misfortune strikes. The cutting room technician misunderstands the editors’ intent and keeps the part they do not want. In the process, he discards the part they actually want to keep. Once again, the loss a cutting room mistake causes is excluded, and the uninsured and uncompensated production costs are really starting to spiral out of control.

 

g. Electric or Magnetic Injury

Coverage does not apply to loss or damage caused by or resulting from electric or magnetic injury, disturbance, or erasure of electronic recordings or videotape. The only exception is when such injury is due to lightning.

h. Voluntary Parting

There is no coverage if the named insured or someone the named insured entrusts property to is tricked or deceived into giving property away.

 i. Unauthorized Instructions

Coverage does not apply if a loss occurs because covered property was given to another person or sent to another place based solely on unauthorized instructions.

j. Neglect

There is no coverage if an insured does not use reasonable measures to save and preserve property from further damage during and after the time of loss.

 k. Theft (01 13 addition)

There is also no coverage for theft committed by anyone else entrusted with property. This exclusion applies whether a person is acting alone or is in collusion with others who committed the theft.

This exclusion applies 24 hours a day. This means that acts that occur during business hours are excluded as well as acts committed after hours.

This exclusion does not apply to covered property entrusted to carriers for hire.

Note: This exclusion was previously part of exclusion c. above. This change does not affect coverage. It makes the exclusion more visible.

3. Other Exclusions

The subparts of this exclusion are sometimes referred to as the anti-concurrent causation exclusions. These exclusions are unique in that, if a loss is covered as a covered cause of loss, with the exception of these exclusions, it is still covered. On the other hand, if the loss would have been excluded anyway, it is still excluded.

Editorial Note: This coverage form does not title these exclusions. The titles given suggest the exclusion’s content.

 a. Weather Conditions

Coverage does not apply to loss or damage that weather conditions cause. This exclusion applies only if the weather condition contributes in any way with an excluded cause or event in 1. Primary Exclusions above that produces the loss or damage.

b. Acts or Decisions

Governmental entities and related groups make decisions and take actions that not only affect others but may also cause loss or damage. Loss or damage that results from such acts or decisions is excluded.

c. Faulty, Inadequate, or Defective Planning

Loss or damage that is due to faulty, inadequate, or defective planning, design, materials, and maintenance is excluded. An important provision is that it applies both on and away from the designated premises.

d. Collapse

Note: Collapse is initially totally excluded here but limited coverage is added back in Section 4. as Additional Coverage–Collapse.

Collapse is excluded. This means the following property conditions are also excluded:

(1) Any type of sudden caving in or falling down

(2) When the structural integrity of the building is lost or compromised. The evidence of this could be parts of the property that separate from the rest of the building or the building appearing to be in danger of caving in or falling down.

(3) Cracking, sagging, expanding, settling, shrinking, bulging, or bending, but only as they relate to items (1) and (2) above

There are two exceptions to this exclusion.

C. Limits of Insurance

The limits on the declarations are the most paid for loss or damage in a single occurrence.

D. Deductible

The deductible on the declarations must be exceeded before the insurance company pays anything. Once the deductible is satisfied the insurance company will pay up to the limit of the insurance that applies. The deductible applies on a per occurrence basis.

E. Additional Conditions

1. Valuation

This condition replaces General Condition F. Valuation in CM 00 01–Commercial Inland Marine Conditions.

Related Article: CM 00 01–Commercial Inland Marine Conditions

Covered property is valued at how much it costs to produce the film. The valuation has two parts. The first part is the cost to reproduce the property that was actually lost or damage. The second part is the reduction in value of any part of the production that was not lost or damaged.

The valuation does not include the cost of the story, scenario, music rights, continuity, permanent sets, owned wardrobes, or props.

The value of the covered production as stated in the named insured's books and records on the date of loss is the most that will be paid. The named insured is required to use any available property or other reproduction methods to reduce the amount of loss or damage.

2. Policy Period

This condition is added to General Condition E. Policy Period, Coverage Territory in CM 00 01–Commercial Inland Marine Conditions.

Related Article: CM 00 01–Commercial Inland Marine Conditions

Coverage is provided until the earliest time in which any of the following occurs:

·        The full quota of positive prints or films is made

·        The named insured's interest in the property ends

·        The policy period ends

·        Coverage is cancelled

3. Additional Conditions

These conditions are in addition to those in IL 00 17–Common Policy Conditions and CM 00 01–Commercial Inland Marine Conditions.

Related Articles:

IL 00 17–Common Policy Conditions

CM 00 01–Commercial Inland Marine Conditions

a. Coverage Territory

The insurance company insures covered property anywhere in the United States of America, its territories and possessions, Puerto Rico, and Canada. Coverage also applies to property within 50 miles of these.

 

Example: Joshua is filming a football event close to the border crossing near Tijuana. He has crews operating on both sides of the border. The film is covered because he is within 50 miles of the United States of America. Coverage does not apply if his crew goes more than 50 miles into Mexico.

 

b. Records

The named insured must keep accurate records of its business and maintain them for at least three years after the policy expires or is cancelled.

c. Reports and Premium

These must be handled in a specific way.

The named insured must send the insurance company a written report for each production when the coverage this form provides no longer applies to that production. The report must include information concerning the actual cost, related overhead, and other expenses of the completed production for all property that this coverage form insures.

The report must also list each studio, laboratory, vault, and cutting room used, as well as the period of time this coverage form insured the property at each of these locations. The named insured must also provide any other information the insurance company requires.

The premium charged for each production is based on the information in the report for it, based on the rates that applied when coverage began. If the earned premium exceeds the provisional deposit premium charged, the named insured pays the difference. If the earned premium is less than the deposit, the insurance company refunds the difference to the named insured. Any additional premium must be paid by the due date on the billing invoice.

ENDORSEMENTS

ISO has developed one endorsement to use with the Film Coverage Form.

CM 45 01–Non-Reporting

This endorsement changes coverage from reporting to non-reporting by deleting the reports and premium condition and introducing the coinsurance clause.

UNDERWRITING CONSIDERATIONS

The biggest issue, which leads to the greatest concern, is where the film is located. Determining who oversees it and taking care of it, how often is it transported, how is it transported, and where is it stored when it is not in use are all important considerations. Films and videos are extremely susceptible to loss or damage by fire, smoke, and water. In addition, certain films may be highly attractive and subject to theft. Every film is unique, and many considerations and issues must be evaluated and considered.