Advertising production is inherently complex, creating exposure to financial and physical risks that must be proactively managed. For senior executives, navigating production insurance is not merely a compliance task; it is a critical component of operational efficiency and brand protection. 

BBS helps advertisers, brands, and procurement teams streamline this process, ensuring comprehensive protection that aligns with budget objectives. 

The Mandate: Why Production Insurance is Non-Negotiable 

Production insurance is foundational for executing any project successfully. Without adequate coverage, basic operations cannot commence: 

• Operational Access: Coverage is often required for renting equipment, securing locations, arranging transportation, and hiring talent, including SAG-AFTRA members. 
• Risk Transference: Accidents are inevitable, and insurance mitigates potentially massive risk exposure by transferring the financial and legal burden to the insurance company. Refusing appropriate coverage could leave a production company vulnerable to legal action or potential bankruptcy.
  
• Vendor Requirements: Collaboration with vendors and labor unions frequently requires proof of insurance before work can begin.
  

Because every production is unique and requires tailored coverage, selecting the correct policy can be daunting. Our expertise simplifies this complexity, providing tailored policies through informed collaboration to protect everyone involved. 

Strategic Decisions: Policy Structure and Cost Efficiency 

For executives focused on optimizing spend, understanding the levers of insurance policy structure is key: 

Premiums vs. Deductibles 

When defining a policy, a critical trade-off exists between premiums (upfront payments to maintain coverage) and deductibles (out-of-pocket costs paid after a claim). 

• Inverse Relationship: Generally, accepting a higher deductible lowers the premium, and vice-versa. Procurement teams must carefully consider this trade-off based on the company’s risk retention strategy. 

Short-Term vs. DICE Policies 

The choice of policy term dramatically impacts cost efficiency, especially for frequent advertisers. 

• Short-Term Coverage: Purchased on a project-by-project basis, ideal for producers with only one or two shoots annually.
• DICE (Documentary, Industrial, Commercial, Educational) Policy: Also known as annual production insurance, a DICE policy covers a production company’s entire slate for a year. For companies handling multiple commercials or educational content, this annual policy is often significantly more cost-effective than negotiating multiple short-term policies. 

Managing Scope and Cost 

Policy specifics—such as the coverage area (which can range from a single soundstage to worldwide coverage)—will influence the price. Clear communication with your broker about filming plans is essential to securing the right policy. 

Ideally, insurance costs should amount to less than 3% of the total production budget. 

Beyond Compliance: Integrating Risk Management 

Insurance acts as a tool within a broader risk management strategy, which aims to minimize losses and subsequently reduce overall insurance costs. This strategy involves four primary methods: 

1. Avoidance: Choosing to avoid specific high-risk activities altogether.
2. Reduction: Taking actions to lower exposure to frequent or catastrophic risks.
   
3. Retention: Accepting and paying for part or all of a risk exposure (e.g., higher deductibles).
   
4. Transference: Transferring risk exposure to another party, typically via an insurance policy.

Critical Documentation: Certificates of Insurance (COIs) 

Operational delays stemming from documentation gaps are costly. A Certificate of Insurance (COI) is the official document proving coverage, and it is customized for each vendor or recipient (the "certificate holder"). 

• COIs must be issued directly by the broker.
• Advance Planning is Essential: Failing to request customized COIs early can stall an entire production, resulting in significant financial consequences for stakeholders. 

Essential Production Coverage Types 

A robust production policy typically incorporates five basic coverage types to ensure comprehensive protection: 

1. General Liability: Covers third-party bodily injury and property damage that occurs on location during filming, including lawsuit coverage. This is often mandatory for major unions. 
2. Workers’ Compensation: Protects employees injured on the job, covering medical expenses, lost wages, and rehabilitation costs for cast and crew. Purchasing this is mandatory in many regions.
3. Inland Marine: Covers physical damage to equipment and property, including rental equipment and damage to rented locations (third-party property).
4. Auto Liability: Covers property damage and medical expenses resulting from incidents involving production vehicles. This may include "non-owned" auto coverage for employees using personal vehicles for business.
5. Excess Liability: Provides additional financial coverage limits above the standard limits of the other four categories.

Understanding these foundational elements ensures that your investment in production is secure against the unpredictability of filmmaking. Just as a financial portfolio diversifies assets to mitigate market volatility, a comprehensive production insurance policy diversifies risk to protect your campaign execution. 

By establishing informed, collaborative partnerships, BBS helps simplify the process, delivering tailored policies that safeguard your investment against physical and financial risk exposure. 

BBS can help you parse the intricacies of advertising production insurance and safeguard your campaign execution. Call us to learn more.