(August 2018)
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The American Association of Insurance Services (AAIS) Negative Film Coverage insures negative film and media. Only film that has been exposed and is considered motion picture film and video or magnetic tapes after recording and their sound recordings can be covered using this coverage form. The coverage is provided based on productions not locations.
Any commercial or non-profit operation is eligible. Only negative film and media is covered. The types of media covered are motion picture film after it has been exposed, magnetic or video tapes after being properly recorded and the sound recordings that are related to either the film or the tapes.
AAIS Negative Film Coverage requires at least these four forms:
Related Article: CL 0100 AAIS Commercial Lines Common Policy Conditions
This Schedule of Coverages is used with IM 1300–Negative Film Coverage. IM 1305 contains the following information:
Limits and premium are entered based on the described production, the production date and the media being covered.
The deductible amount the named insured retains for each covered loss must be entered in the space provided.
Three optional endorsements are available. Entries are required on the schedule of coverages when used.
Coverage applies only when covered property is at studios, laboratories, cutting rooms and vaults located in the type of premises and location of the premises entered on the schedule of coverage. Items that are in transit between the described locations are also covered.
Only exposed motion picture property that is stored in a vault is covered when this endorsement is attached. The type of vault and its location must be entered in the spaces provided on the schedule of coverages.
Note: This endorsement makes no reference to video or magnetic tape nor to sound recordings.
When this endorsement is attached and selected on the schedule of coverages, the coverage is written on a non-reporting basis and subject to 80% coinsurance.
If coverage is on a non-reporting basis, the annual premium, and the non-reporting rate are entered in the spaces provided. If coverage is on a reporting basis, the deposit premium, the minimum premium, and the reporting rate are entered in the spaces provided.
Values must be reported for each location on the schedule of coverages. This section includes a provision that any additional premium developed after expiration based on reports of value submitted is due on the date on the billing invoice.
This analysis is of the 01 05 edition.
This section states that the insurance company provides the coverage
described in return for the named insured paying the required premium. This
agreement is subject to all the coverage form’s terms, the schedule of
coverages, and any additional conditions that apply. Endorsements or additional
schedules identified on the schedule of coverages also apply.
A statement that certain words and phrases identified in bold print in
the coverage form are defined in the Definitions section that is immediately
following this Agreement.
Note: There is no clearly marked space on the
schedule of coverages to list endorsements or additional schedules that apply
at inception.
Definitions
Defined words are used throughout the coverage form. When these terms are used in the coverage form, the meaning provided in this section must be applied. Nine terms are defined:
1. You and your
The parties that are
specifically named on the declarations as insureds.
2. We, us, and our
The insurance company that is
providing the coverage.
3. Limit
The amount of coverage that applies.
Note: There is no reference as to what it applies; it just applies.
4. Pollutant
This is a broad and expansive term. It is solids, liquids,
thermal or radioactive contaminants, and irritants. It includes, but is not
limited to, acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste.
Waste includes materials intended for recycling, reclamation, and
reconditioning, as well as for disposal. Visible and invisible electrical or
magnetic emissions and sound emissions are also
considered pollutants.
5. Schedule of
coverages
Any
page labeled as such that contains coverage information, including declarations
or supplemental declarations.
6. Sinkhole collapse
The
earth’s surface suddenly settling or collapsing into an underground opening
that was created by water acting on limestone or some other rock
formation. Sinkhole collapse does not include either the land’s value or the
cost to fill sinkholes.
7. Specified perils
The
named perils of aircraft, civil commotion, explosion, falling objects, fire,
hail, fire extinguishing equipment leakage, lightning, riot, sinkhole collapse,
smoke, sonic boom, vandalism, vehicles, volcanic action, water damage,
the weight of sleet, snow or ice and windstorm. Two terms need
further explanation.
Falling
objects does not include loss to personal property
stored in the open. It also does not include damage to the interior of
buildings or personal property stored in buildings
unless a falling object first breaches the building's exterior.
Water
damage is the sudden or accidental discharge or leakage of water or
steam. However, it must be a direct result of a part of the system or
appliance that holds the water or steam cracking or breaking.
8. Terms
These are all provisions, limitations, exclusions, conditions, and
definitions that apply to this coverage.
9. Volcanic action
An
airborne volcanic blast or shock wave. It is also ash, dust, and
particulate matter along with any lava flow. The term does not include the cost
of removing dust, ash, or particulate matter from
the covered property unless there is direct physical damage to the
property.
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Example of exposed motion picture film |
The insurance company covers property that is described below unless it is excluded or subject to limitations.
Negative Film
1. Coverage
The named insured’s motion picture film that has been exposed and similar property that belongs to others but is in the named insured’s care, custody, and control is covered for direct physical loss or damage caused by a covered peril.
2. Coverage Limitation
The covered exposed motion picture film is limited to the following:
a. Exposed motion picture film which includes its sound track or any other sound recording
b. Magnetic or videotape which includes its soundtrack or other recorded sound record but only after it has been checked and replayed following a recording.
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Editorial Notes:
The coverage provided is very confusing which could be to the named insured’s advantage.
1) Item 1. states that it applies only to the named insured’s exposed motion picture film and similar property of others. However, under limitations coverage is expanded under item 2.a. to include the exposed motion picture film AND its sound record. Then under item 2.b, magnetic and videotape is covered along with their sound records. This means that the coverage is expanded under a limitation – not limited.
2) Item 2.b. does appear to restrict coverage. The last sentence limits coverage to only the production listed on the schedule of coverages. Item a. does not have a corresponding restriction. This means that item a. could cover any and all of the named insured’s productions. This contrasts with how the coverage is rated (per production). As a result, the intent of the Limitation may be to restrict all coverage to only a listed production. Unfortunately, as written, this coverage restriction to only the listed production(s) appears to apply to only item b.
Compare this wording to the similar ISO CM 00 45–Film Coverage
Form which approaches this in a much more straight
forward manner.
Related Article: ISO Film Coverage Form Analysis
There is no coverage for the following property:
1. Contraband
2. 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.
3. 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 negative film moves from active stock to library stock.
4. 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.
5. Unused Footage
Any film that is works that are not used in the final production.
Coverage applies to risks of direct physical loss unless the loss is limited, or an excluded peril causes the loss.
Example: The film had taken two years from start to finish but it was finally ready. Marketing had started, and the premiere was set when a scandal related to the leading actor occurred. The studio was going to pull the plug, but the director showed how the movie could be saved by reshooting with another actor. The cast cooperated, and the film was released as planned. The studio requested coverage under this coverage form, but all the claim was denied because the reputation of the lead actor was not a direct physical loss to the negative film. |
1. Coverage
2. Covered Perils
The only collapse coverage provided is collapse caused by one of more of the
following:
3. Collapse Means
Collapse is the sudden and unexpected falling in or caving in of a
building or structure (or any part of it) that prevents the building
from being occupied for its intended purpose.
4. Collapse Does Not
Mean
The following buildings and structures are not considered to be
in a state of collapse:
5. Coverage
Limitation
This coverage does not provide any increase in the limit for covered property.
Perils
Excluded
1. Primary Exclusions
The
first group of exclusions is essentially absolute. Subject to specific
exceptions, loss or damage by each is totally
excluded, regardless of any other cause or event that contributes to a loss,
either concurrently or in any other sequence. The insurance company does not
pay for any direct or indirect loss or damage caused by or that results from
any of these events.
a. Civil Authority
There is no
coverage for loss that results from an order any civil or government
authority issues. These orders may include seizure, confiscation,
destruction, or quarantine of property but this exclusion is not limited to
only these. The only exception is when a civil authority destroying property as
a means of controlling a fire causes the loss or damage. This exception applies
only if the fire is the result of a covered peril.
b. Nuclear
Hazard
The insurance
company does not insure against loss or damage from any nuclear reaction,
radiation, or contamination, whether the nuclear incident was controlled or
not, or was caused by any means. Any loss caused by the nuclear hazard is
not treated as a loss caused by fire, explosion, or smoke. However, coverage applies to direct loss or
damage caused by fire that results from the nuclear hazard.
c. War and Military Action
The insurance
company does not pay for loss or damage caused by any act of war. Undeclared
and civil war or warlike action by a military force are all
considered war. All actions taken to hinder or defend against an actual or
expected attack by any government or sovereign authority that uses military
personnel or other agents are also considered war and excluded. In
addition, acts of insurrection, rebellion, revolution, or unlawful seizure of
power and any action any government authority takes to prevent or defend
against any such acts are excluded. If any action within the terms of this exclusion involves nuclear
reaction, radiation, or contamination, this exclusion applies in place of the
nuclear hazard exclusion.
Note: This means that the
exception for resulting fire under the nuclear hazard is not
covered when it is the result of war.
2. Secondary
Exclusions
The second
group of exclusions applies to loss or damage caused by or that
results from any of the following loss events. Some of these exclusions
have exceptions, conditions, or limitations that should be noted and
reviewed carefully. The insurance company does not pay for any loss or damage
caused by or that results from any of these events.
a. Acts or Decisions
There is no coverage for loss caused by or that results from any acts or
decisions by any person, organization, or government entity. This also includes
failing to act or decide.
This exclusion has an exception. The act or decision, or the failure to
act or decide, may result in a covered peril. In that case, the loss or damage
that peril causes is covered.
b. Collapse
Loss caused by collapse is excluded.
This exclusion has two exceptions.
c. Contamination or Deterioration
Loss or damage that is caused by contamination or deterioration is excluded. This applies to corrosion, decay, fungus, mildew, mold, rot, and rust. It also applies to any quality, fault, or weakness in covered property that causes it to damage or destroy itself. However, this exclusion is not limited to only these described causes. This exclusion has an exception. When contamination or deterioration results in a covered peril, the loss or damage that covered peril causes is covered.
d. Criminal, Fraudulent, Dishonest, or Illegal Acts
Coverage does not apply to loss caused by or that results from criminal, fraudulent, dishonest, or illegal acts, committed by any of the following alone or in collusion with another:
Coverage applies if employees destroy property. It does not apply if employees steal.
This exclusion does not
apply to covered property in the custody of a carrier for hire.
e. Developing
Chemicals
When loss or damage is caused by or is the result of a chemical to develop film there is no coverage. Damage due to laboratory work is also excluded.
Note: The name of the exclusion does not mention laboratory work which could make this exclusion appear to be misleading. The term “laboratory work” is used and not defined. It is not a common term in film production so could be difficult to enforce as an exclusion.
Example: Don’s Documentaries shoots a documentary about whitewater rafting and much of the filming takes place on wild rivers. Don shoots some footage and gets the film back to the developing lab safely. However, the technician mixes and uses the wrong solution of developing chemicals and the film, while not completely ruined, cannot be used. This loss is excluded, and Don must reshoot it. |
f. Developing Film
Loss or damage during the actual processing of the film through developing, cutting, or printing a film project or tape is not covered.
Example: The next day goes well. Don completes the shoot early in the day and gets the film to the lab safely. After it is developed, the editors select and mark the portions they want. However, the cutting room technician misunderstands the editors’ instructions and keeps the part they want discarded. Even worse, he discards the part they actually want to keep. This exclusion eliminates coverage for the cutting room’s mistake. |
g. Electrical 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.
Example: At last! The whitewater rafting documentary video tape is complete, developed, processed, edited, cut, and "in the can!" Don locks it up in the lab and leaves. However, a powerful spring storm moves in and lightning strikes an electric transformer on the premises. The power surge shorts out an ultraviolet lamp in the lab that was left on and ignites the volatile chemicals kept there. The facility burns to the ground. Coverage applies because lightning was the proximate cause of the loss. |
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h. Exposure of
Negative Film
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.
i. Fault, Defect, or Error
Loss or damage that is
due to errors, faults or defects in planning, zoning, surveying, site plans, grading, compacting, land use, or
development is not covered. Loss or damage due to property related design,
blueprint, specification, workmanship, building, maintaining, installing,
renovating, remodeling, or the repairing errors, faults or defects are also
excluded.
An important provision is that this exclusion applies both on and away from the designated premises and applies regardless of negligence.
This exclusion has an exception. One of these events may result in a covered peril. In that case, the loss or damage that peril causes is covered.
j. Loss of Use
There is no coverage for loss that is
the result of delay, loss of use, or loss of market.
k.
Pollutants
There
is no coverage for loss caused by or that results from any release, discharge,
seepage, migration, dispersal, or escape of pollutants. There are two exceptions:
l. Temperature or Humidity
Coverage is not provided when dryness, dampness, humidity, or changes
and extremes of temperature cause or result in loss or damage to covered
property.
This exclusion has an exception. If any of the above result in a covered
peril the loss or damage from that peril is covered.
m. Unauthorized
Instructions
Coverage does not apply if a loss occurs because property was given to another person or sent to another place based on unauthorized instructions.
n. Voluntary Parting
There is no coverage for loss to covered property
voluntarily given to others, even if the surrender was due to a fraudulent
scheme, trick, or false pretense.
o. Weather
This exclusion has an exception. The weather conditions may result in a covered peril. In that case, the loss that peril causes is covered.
1. Notice
The named insured must give prompt notice of a loss to the insurance company or its agent. The notice must include a description of the property lost or damaged. If a criminal act caused the loss, the appropriate law enforcement agency must also be notified. The insurance company has the right to require that any notice to it be in writing.
2. You Must Protect
Property
During and after a loss, the named insured must take all reasonable steps to protect covered property from further loss. The insurance company pays reasonable costs the named insured incurs to do so if the named insured maintains accurate records to substantiate the costs. Paying these costs is not in addition to the policy limits. There is no coverage for any repairs or emergency measures performed on property not already damaged by a covered peril.
Note: It is important to realize that any such costs incurred will reduce the amount available to pay the actual loss.
3. Proof of Loss
The named insured must complete and return the insurance company's prescribed proof of loss forms within 60 days after the company requests it. The information provided must include the time, place, and circumstances involved with the loss and information on any other insurance coverage that may apply. It must also include the named insured’s interest and the interest of others with respect to the property involved, including liens, and mortgage. Any changes in the title to the property during the policy period must be disclosed, in addition to providing any other reasonable information including inventories, specification and estimates the company may require in settling the loss.
4. Examination
Examination of the named insured under oath may be required in matters that relate to the loss. The insurance company may request these examinations more than once, but such requests must be reasonable. If multiple persons are examined, the company has the right to examine each individual separately.
5. Records
The named insured must produce any records related to the loss. The insurance company must be allowed to make copies and take extracts of them as often as it reasonably requests. Records include tax returns and bank microfilms of all related cancelled checks, but records are not limited to just these.
6. Damaged Property
Both damaged and undamaged property must be made available for the insurance company's inspection as often as reasonably necessary. It must also be allowed to take samples of the property and to inspect it.
7. Volunteer Payments
The named insured has the right to make payments, assume obligations, pay, or offer rewards, or incur other expenses. However, unless the insurance company has given written approval for such actions, the named insured cannot expect any reimbursement. The only exception is that the insurance company will pay for the costs incurred to protect property as item 2. above describes.
8. Abandonment
The insurance company decides when and if it will take ownership of the named insured’s property. The named insured is therefore not permitted to abandon damaged property to the insurance company until the insurance company agrees in writing to accept it.
9. Cooperation
The named insured must cooperate with the insurance company. Any actions required of the named insured within this policy must be performed.
1. Property
Valuation is subject to 2. Pair or Set and 3. Loss to Parts below.
a. Valuation
The value of covered property at the time of loss or damage is the cost to repair or reproduce the lost or damaged property. It is also the reduced value of undamaged portions of the production.
b. Valuation Does Not
Include
The costs of the story, scenario, music rights, continuity, permanent sets, props, and wardrobes the named insured owns are not included as part of the valuation.
Related Article: AAIS Theatrical Property Coverage
2. Pair or Set
The
value of a loss that involves damage or loss of one part of a pair or
set is based on a reasonable proportion of the value of the entire
pair or set. However, the loss of one part of a pair or set is not
considered a total loss.
Note: This recognizes that the value of the whole is greater than
the value of individual parts but that the remaining parts still have value as
separates.
3. Loss to Parts
The
value of a lost or damaged part of the property that consists of
several parts is the cost to repair or replace only the lost or damaged part.
1. Insurable Interest
The insurance
company does not pay more than the named insured's insurable interest in the
covered property at the time of loss.
2. Deductible
The insurance
company pays only the amount of loss that exceeds the deductible amount on the
schedule of coverages.
3. Loss Settlement
Terms
a. The insurance company pays the least of the following, subject to the other items in this section:
4. Insurance under
More Than One Coverage
Two or more coverages in the coverage form may cover the same loss. In
that case, the insurance company does not pay more than the actual value of the
claim, loss, or damage sustained.
5. Insurance under
More Than One Policy
a. Proportional Share
The named insured may
have other coverage subject to the same terms as this coverage form. In that
case, this coverage form pays only its share of the covered loss. That share is
the proportion that its limit of insurance bears to the limits of insurance on
all insurance that covers on the same basis.
b. Excess Amount
There may be other coverage available to pay for the loss other than as described in item 5. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether it can be collected or not. Any payment is subject to the limit of insurance that applies.
1. Loss Payment
Options
a. Our Options
The insurance company has four loss payment options
if a covered loss occurs.
b. Notice of Our Intent
to Rebuild, Repair, or Replace
The insurance company must notify the named insured
of its intent to rebuild, repair, or replace within 30 days of receiving a
properly completed proof of loss.
2. Your Losses
a. Adjustment and Payment of Loss
The insurance company adjusts all losses with and pays the named insured. The only exception is when a loss payee is on the policy.
b. Conditions for Payment of Loss
The insurance company pays a covered loss within 30 days after it receives a properly prepared proof of loss and the amount of loss is established. The amount of loss is determined either through a written agreement between the company and the named insured or after an appraisal award is filed with the company.
3. Property of Others
a. Adjustment and Payment of Loss to Property of Others
The insurance company has the option to adjust and pay losses that involve property of others to either the named insured on the property owner’s behalf or to the property owner.
b. We Do Not Have to Pay You if We Pay the Owner
The insurance company is not obligated to pay the named insured when it pays the property owner. In addition, if the property owner sues the named insured, the company has the option to defend the named insured in that suit.
1. Reports
Reports are required to be in writing. The report must be as of the last day of shooting for each covered production. The reports are required to provide the production’s actual costs, overhead, and related expenses.
2. When Reports Are
Due
Reports are due to the insurance company within 30 days following each production’s last day of shooting.
3. Premium Adjustment
The deposit premium for each covered production is only an estimate. The actual earned premium is based on the total of all amounts reported for each covered production multiplied by the reporting rate that applies. The actual premium is compared to the deposit. If the actual premium is higher than the deposit, the named insured pays the difference to the insurance company. If the actual premium is less than the deposit, the insurance company refunds the difference to the named insured. Any return premium is subject to any minimum premium that applies.
1. Appraisal
Either party can request an appraisal to
determine a disputed claim’s value. Once requested, the parties have 20 days to
obtain their own independent and competent appraisers and give their
appraiser's name to the other party. The two appraisers then have 15 days to
select a competent impartial umpire. If they cannot agree on an umpire within
that time period, either can request that a judge
in the court of record in the state where the property is located appoint one.
The appraisers then determine the claim’s
value. They submit any differences to the umpire. Once any two of the three
parties agree, the amount of loss is set.
Each party pays its own appraiser. Both parties
share the umpire’s cost and other expenses equally.
2. Benefit to Others
The insurance
provided does not directly or indirectly benefit any party that has custody of
the named insured's property.
3. Conformity with
Statute
Any condition
in this coverage form that conflicts with any applicable law is amended to
conform to that law.
4. Estates
a. Your Death
This
applies only when the named insured is an individual. When a
named insured dies, the person who has custody of the named insured's
property is an insured for that property until a qualified legal representative
is appointed. Once the named insured’s legal representative is named,
that person has custody but only for the property covered under this policy.
b. Policy Period is not Extended
This
coverage does not extend past the policy’s expiration date.
5. Liberalization
A revision of this coverage form or an applicable endorsement that takes effect during the policy period or within six months of when this coverage takes effect may broaden coverage without an additional premium charge. In that case, the broadened coverage applies to this coverage.
6. Misrepresentation,
Concealment, or Fraud
This coverage
is void if any insured at any time willfully concealed or misrepresented a
material fact that relates to the insurance provided, the property covered, or
its interest in the property. It is also void if any insured engaged in fraud
or false swearing with respect to the insurance provided or the property
covered.
Note: The named insured must deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a material fact or information. This means that the insurance is treated as simply having never existed versus a particular claim being denied.
7. Policy Period
Only covered
losses that occur during the policy period are paid.
8. Recoveries
Payment of the loss does not end the obligations of the named insured and the insurance company toward one another. Additional provisions apply if the insurance company pays a loss and the lost or damaged property is subsequently recovered or the parties responsible for the loss pay for it.
Either party that recovers property or payment must inform the other. Recovery expenses that either party incurs are reimbursed first. If the named insured keeps the recovered property, it must refund the amount of the claim the insurance company paid, unless the company agrees to a different amount. If the claim paid is less than the agreed loss due to applying a deductible or other limitation, any recovery is prorated between the named insured and the insurance company, based on the company's respective interest in the loss.
9. Restoration of
Limits
Payment of a
claim does not reduce the limit available for future claims.
10. Subrogation
The insurance company acquires the named insured's rights of recovery from third parties after it pays a loss. The named insured must help the company secure those rights. The insurance company is not obligated to pay the loss if the named insured hinders or impairs its rights of subrogation.
The named
insured has the right to agree in writing to waive recovery rights from any
party when it does so before a loss occurs.
11. Suit against Us
The insurance company cannot be sued by anyone for any coverage until all the terms of the coverage form have been met. Suits must be brought within two years after the named insured first knew about a loss. If a state law invalidates this condition, any suit brought must comply with that law’s provisions and begin within the shortest period of time allowed by law.
Note: It is normal for a basic coverage form to be modified by mandatory state-specific endorsements that address issues that relate to that state.
12. Territorial
Limits
Covered property must be in the United States of America, its territories and possessions, Canada, Puerto Rico, or within 50 miles of any of these for coverage to apply.
AAIS has developed three endorsements to use with Negative Film Coverage.
Coverage applies only when covered property is at studios, laboratories, cutting rooms and vaults located in the type of premises and location of the premises entered on the schedule of coverage. Items that are in transit between the described locations are also covered.
Only exposed motion picture property that is stored in a vault is covered when this endorsement is attached. The type of vault and its location must be entered in the spaces provided on the schedule of coverages.
Note: This endorsement makes no reference to video or magnetic tape not to sound recordings.
When this endorsement is attached and selected on the schedule of coverages, the coverage is written on a non-reporting basis and subject to 80% coinsurance.
The biggest issue (which leads to the greatest concern) is…where is the film? Who oversees it and is taking care of it? How often is it transported and how is it transported? Where is it stored when it is not in use? 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 taken into account.