BY:Steven Beer, Jake Levy & Neil Rosini
This Q&A was originally published in the Fall 2017 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.
Apart from the deductible and losses that exceed the policy limit, E&O insurance doesn’t cover claims that fall outside the defined scope of coverage, and the typical policy provides a detailed list of examples called “exclusions.” First and foremost, E&O insurance won’t cover the sort of conduct that isn’t an “error or omission” – in other words, not an inadvertent mistake. Claims arising from fraudulent or dishonest conduct or willful violation of law are typically excluded.
Claims for patent infringement, unfair competition, deceptive trade practices, disclosure of trade secrets (or at least disclosure that doesn’t occur in the film itself), consumer fraud, violation of state or federal regulations, and misstatements in financial reports or filings, are typical exclusions. E&O policies don’t cover bodily injury or property damage, either, for which a producer should get separate coverage.
Some exclusions are less intuitive. For example, E&O insurance typically does not cover soundtrack recordings unless specifically added to the coverage. It does not cover obligations owed by the insured in the role of an employer. More generally, it does not cover liability for breach of contract, subject to limited exceptions.
An E&O policy can be cancelled by an insurer for various reasons, such as nonpayment of a premium or a material misrepresentation or fraud in the application process, or a change in circumstances that materially increases the insurer’s risk.