"Producer's Corner" by Bruce Lazarus "Everything You Always Wanted To Know About Theatrical Insurance But Were Afraid To Ask" Recently our guest was Robert Boyar, Senior Vice President of J&H Marsh & McLennan, theatrical insurance brokers in New York City. Robert discussed the various insurance policies producers need to consider when setting up their productions. I felt a TeleCourse on this subject was very important because in my experience, many producers do not adequately “think out” their insurance needs. Some spend too much money and overinsure their productions, buying every policy available because they have not taken the time to consider the specific needs of their productions and what policies may not be necessary. Others underinsure their productions, thinking only about the money they are spending and not giving enough thought to the possibility of the unexpected.
Robert outlined the different kinds of insurance policies available to theatrical producers, and explained what they cover and when they may apply. First, he explained that under the Worker’s Compensation Act, any person who works at the time and place of your choosing and under your supervision, following instructions from you, is deemed your employee and therefore should be covered by you under a worker’s compensation insurance policy.. Obviously, when you are producing a show this applies to your actors, director and crew. The law also requires that the person receive some form of compensation from you in order to be your employee, however, that compensation need not be financial, so you are not “off the hook” if you are not paying your actors. Anything of benefit to the actors, such as your inviting people who might advance the actors’ careers to see the production, may be considered compensation. Those who do their work elsewhere and use their own judgment to complete a project, such as your playwright and designers, do not fall into this category and may be deemed independent contrators.
Next, Robert explained the liability policy. Especially if you are renting a theatre under a “four wall” contract which leaves you responsible for anything that happens while your production is in the theatre, you need to consider a liability policy, which covers claims against you should a non-employee be injured in your theatre. Such a policy would cover claims against you by all non-employees. It is especially critical here to determine how much coverage you may need by taking into consideration the size and scale of your theatre and production, and any potential hazards. Most liability policies, Robert explained, have a limit of no more than 1 million dollars worth of coverage per incident. If 5 people are injured in your theatre by 1 incident and each sues you for 1 million, you are going to need more than just one 1 million dollar policy. Most Broadway productions are insured under these kinds of policies for up to 10 million dollars. Liability insurance has no deductible and covers you from the beginning of any claim against you.
The annual premium you will pay for your worker’s compensation and liability policies will be based on the salaries you pay to your employees in different employee classes. Your actors, crew, and press agent, for example, will be in 3 different employee classes. You will first receive an estimate for your premium, which will be based on all the salaries totaled together. That figure will be divided, and you will make a 1/3 deposit and then payments throughout the year that add up to that premium estimate. At the end of the year, the insurance company will audit your payroll records, come up with a “true premium” based on those, and will adjust. Because the premium is based on payroll, a one-person show that involves a lot of special effects and mechanized set changes in a large theatre, while it may seem more inherently dangerous, may pay a lower premium than a one-set play in a small theatre with a cast of twenty.
Errors and Omissions insurance, which covers claims for copyright infringement, slander, defamation and other similar claims, is also very important to consider but not always necessary. However, sometimes no matter how original the work you are producing may appear, there may be a person who claims that the work has infringed upon a work he or she wrote, or injured him or her in some other manner. Robert recalled one case where an author wrote a play based on his own family, and the producer and author were sued by a person who insisted that the play was based on his family.
Other insurance policies you should consider are on the loss or damage of property, that belonging to the production (such as sets and costumes) and that belonging to the actor, because if an actor’s property left in the care of the production is lost or damaged the production is liable. Business interruption insurance will cover you if an unforeseen event forces you to postpone or cancel performances and lose ticket sales. Non-appearance insurance will cover you if you have a major star who cannot perform due to accident or illness, and you lose ticket sales because the audience was counting on seeing that particular star. Producers should also consider non-owned and hired car coverage. Sometimes a car or truck will be driven on behalf of your production, and you will not know about the insurance the car or trucking company already has on its cars, trucks and drivers. Since the driver is working as your agent, you may need this coverage.
As an example of why insurance is so critical, Robert told us about the insurance issues involved in Beatlemania, in which a cast of four who looked like The Beatles dressed as The Beatles and performed Beatles songs. The producers had only acquired the performing rights to the songs from the music publisher. The underwriter of the show’s insurance policy, Chubb, did not want to underwrite an errors and omissions policy for the show because they thought the possibility of suits for invasion of the fab four’s privacy were too great. Six months after beginning performances on Broadway the producers approached Chubb again, and since there had been no claim they agreed to underwrite the errors and omissions policy. When the show got to Los Angeles on tour, the Beatles sued for using their likeness. The producers paid a $10,000 deductible and kept their huge profits, and the insurance company paid out several million dollars.
Insurance premiums will probably be about 1% of your initial budget, and 1% of your operating costs as the show goes on. Even if you are producing a small showcase in a theatre with 99 seats or less, you should purchase a basic 13 week or less worker’s compensation policy, keeping in mind your rehearsal time. According to Robert, you can get this kind of a policy for $1,500.00, and with it some peace of mind.
That’s show biz.
Bruce Lazarus the former Director of Business and Legal Affairs for Walt Disney Theatrical Productions and producer of the current off-Broadway show Shakespeare's "R&J."
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