Summary: The film coverage form (CM 00 45) provides broad coverage for exposed motion picture and magnetic or video tapes, including sound tracks and other sound records. Any person or firm engaging in commercial production of motion picture films or the commercial recording of magnetic or video tapes is eligible for coverage. Like the other coverage forms in the current Insurance Services Office (ISO) commercial inland marine program, the form is combined with a declarations page, common policy conditions form (IL 00 17), and inland marine general conditions form (CM 00 01) to make a policy. Following is a discussion of the form.
Introduction
The film coverage form is for those engaged in the production of commercial films or in commercial recording of magnetic or video tapes. It may be written on a reporting or nonreporting basis, and restricted to certain locations. When written on a nonreporting basis, form CM 45 01 is added. Consult the commercial lines manual (CLM) for rules.
Insuring Agreement
A. COVERAGE
We will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.
1. COVERED PROPERTY, as used in this Coverage Form, means:
a. Exposed motion picture film and its sound track or other sound record; and
b. Properly recorded magnetic or video tape and its sound track or other sound record. Tape is considered to be properly recorded if it has been replayed and checked after recording;
when used in the production shown in the Declarations and that you own or have in your care, custody or control.
Analysis
The film coverage form provides open perils coverage, subject to certain exclusions (see below). Specific productions to be covered must be scheduled in the declarations, along with a limit of insurance for each production.
The property covered by the form is:
(a) exposed motion picture film (in other words, not blank) and its sound track or other sound record, and
(b) properly recorded magnetic or video tape and its sound track or other sound record. (Tape is “properly recorded” if it has been replayed and checked after recording.)
The policy is written on a reporting basis, with an optional nonreporting endorsement for use with insureds whose insured property is not subject to frequent fluctuations in value (CM 45 01).
Property Not Covered
2. PROPERTY NOT COVERED
Covered Property does not include:
a. Cut-outs;
b. Unused footage;
c. Positive prints or films;
d. Library stock; or
e. Contraband, or property in the course of illegal transportation or trade.
Analysis
In keeping with the intent of the film coverage form, covered property does not include coverage for cut-outs, unused footage, positive prints or films, or library stock. The film coverage form is designed for the film production process; once that process is complete, coverage ceases (see the discussion on the policy period, below). As is common with the inland marine forms (and, indeed, with the other commercial property forms), there is no coverage for contraband, or property in the course of illegal transportation or trade.
Causes of Loss
3. Covered Causes of Loss
Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS OR DAMAGE to Covered Property except those causes of loss listed in the Exclusions.
Analysis
The film coverage form is written on an open perils basis. Unless specifically excluded or limited (see the additional conditions), all losses are covered subject to the deductible and applicable limits of insurance. Note, however, that the form covers direct physical loss; no time element or loss of use or market coverage is provided.
Collapse
4. ADDITIONAL COVERAGE – COLLAPSE
We will pay for direct loss or damage caused by or resulting from risks of direct physical loss or damage involving collapse of all or part of a building or structure caused by one or more of the following:
a. Fire; lightning; windstorm; hail; explosion; smoke; aircraft; vehicles; riot; civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; breakage of building glass; falling objects; weight of snow, ice or sleet; water damage; earthquake; all only as insured against in this Coverage Form;
b. Hidden decay;
c. Hidden insect or vermin damage;
d. Weight of people or personal property;
e. Weight of rain that collects on a roof;
f. Use of defective materials or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
This Additional Coverage does not increase the Limits of Insurance provided in this Coverage Form.
Analysis
As do other commercial forms, this form adds collapse as an additional coverage, although the limit of insurance is not increased. The current form has broadened the coverage so that collapse caused by earthquake is included.
Exclusions
B. EXCLUSIONS
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
a. GOVERNMENTAL ACTION
Seizure or destruction of property by order of governmental authority.
But we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread if the fire would be covered under this Coverage Form.
b. NUCLEAR HAZARD
(1) Any weapon employing atomic fission or fusion; or
(2) Nuclear reaction or radiation, or radioactive contamination from any other cause. But if nuclear reaction or radiation, or radioactive contamination results in fire, we will pay for the direct loss or damage caused by that fire if the fire would be covered under this Coverage Form.
c. WAR AND MILITARY ACTION
(1) War, including undeclared or civil war;
(2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or
(3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these.
Exclusions B.1.a. through B.1.c. apply whether or not the loss event results in widespread damage or affects a substantial area.
2. We will not pay for loss or damage caused by or resulting from any of the following:
a. Delay, loss of use, loss of market or any other consequential loss.
b. Deterioration, atmospheric dampness or changes in temperature.
c. Dishonest or criminal act committed by:
(1) You, any of your partners, employees, directors, trustees, or authorized representatives;
(2) A manager or a member if you are a limited liability company;
(3) Anyone else with an interest in the property, or their employees or authorized representatives; or
(4) Anyone else to whom the property is entrusted for any purpose.
This exclusion applies whether or not such persons are acting alone or in collusion with other persons or such acts occur during the hours of employment.
This exclusion does not apply to Covered Property that is entrusted to others who are carriers for hire or to acts of destruction by your employees. But theft by employees is not covered.
d. Exposure of negative film to light.
e. Use of developing chemicals.
f. Developing, cutting or printing of film or other laboratory work.
g. Electric or magnetic injury, disturbance or erasure of electronic recordings or video tape.
But we will pay for direct loss or damage caused by lightning.
h. Voluntary parting with any property by you or anyone entrusted with the property if induced to do so by any fraudulent scheme, trick, device or false pretense.
i. Unauthorized instructions to transfer property to any person or to any place.
j. Neglect of an insured to use all reasonable means to save and preserve property from further damage at and after the time of loss.
3. We will not pay for loss or damage caused by or resulting from any of the following. But if loss or damage by a Covered Cause of Loss results, we will pay for the loss or damage caused by that Covered Cause of Loss.
a. Weather conditions. But this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss or damage.
b. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.
c. Faulty, inadequate or defective:
(1) Planning, zoning, development, surveying, siting;
(2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;
(3) Materials used in repair, construction, renovation or remodeling; or
(4) Maintenance;
of part or all of any property wherever located.
d. Collapse except as provided in the Additional Coverage – Collapse section of this Coverage Form.
Analysis
In addition to the exclusions common to all of the current ISO commercial inland marine coverage forms, the film form is subject to seven additional exclusions. These reflect the nature of the losses particular to the film processing industry, and reinforce that the insurance is provided for direct physical damage, and not loss of market share. Further, losses resulting from faulty development procedures—exposure of the negatives to light, faulty or impure chemicals used in developing, or lab work including cutting or printing—are excluded from coverage. The current edition adds a lengthy exclusion of criminal or dishonest acts. It also adds an exclusion for neglect by the named insured to protect property once a loss has occurred.
Limits of Insurance and Deductible
C. LIMITS OF INSURANCE
The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.
D. DEDUCTIBLE
We will not pay for loss or damage in any one occurrence until the amount of the adjusted loss or damage before applying the applicable Limits of Insurance exceeds the Deductible shown in the Declarations. We will then pay the amount of the adjusted loss or damage in excess of the Deductible, up to the applicable Limit of Insurance.
Analysis
The standard deductible is $500, unless the insured selects a different amount. The adjusted loss is determined; this must exceed the deductible before the insurer has an obligation to pay the loss. The amount in excess of the deductible, up to the limit of liability, is the amount that will be paid for any one loss.
Additional Conditions
E. ADDITIONAL CONDITIONS
1. VALUATION
General Condition F. Valuation in the Commercial Inland Marine Conditions is replaced by the following:
The value of Covered Property will be the cost of production including costs covered by this Coverage Form that are applicable to the production.
In the event of loss or damage, the value of Covered Property will be the sum of the following amounts:
a. The cost of reproducing the lost or damaged property; and
b. The reduction in value of undamaged parts of a production.
Our payment will not exceed the value of the covered production as shown in your books as of the time of loss or damage. You will use any available property or other methods of reproduction to reduce the amount of loss or damage.
The value of Covered Property will not include the cost of the story, scenario, music rights, continuity, permanent sets, owned wardrobes and props.
2. POLICY PERIOD
The following is added to General Condition E. Policy Period in the Commercial Inland Marine Conditions:
We cover property until:
a. The full quota of positive prints or films has been made;
b. Your interest in the property has ceased;
c. The end of the policy period; or
d. This coverage is cancelled;
whichever occurs first.
3. The following conditions apply in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions:
a. COVERAGE TERRITORY
We cover property wherever located within:
(1) The United States of America (including its territories and possessions);
(2) Puerto Rico; and
(3) Canada .
We also cover property within 50 miles of these.
b. RECORDS
You will keep accurate records of your business and retain them for 3 years after the policy ends.
c. REPORTS AND PREMIUM
You will send us a written report for each production when this Coverage Form ceases to cover that production. This report will state the actual cost, related overhead expenses and other expenses of the completed production for all items covered by this Coverage Form.
Your report will list each studio, laboratory, vault and cutting room used and the period of time this Coverage Form covered the property at each of these locations. It will also include such other information we may require.
The actual premium to be charged for each production will be based on your report and will be computed using the rate(s) in effect at the time coverage begins. If this actual premium is more than the premium paid for this coverage, you will pay us the additional premium. If it is less than the premium paid, we will return the difference to you.
Analysis
The valuation condition (general condition F.) in the commercial inland marine conditions form (CM 00 01) is replaced by a different condition that values covered property as the sum of the cost of reproducing the lost or damaged property and the reduction in value of undamaged parts of a production. The payment will not exceed the value of the covered production as shown in the named insured's books as of the time of the loss. Also, the named insured is required to use any available property or other methods or reproduction to reduce the amount of the loss. Finally, the condition states that this value will not include the cost of the story, scenario, music rights, continuity, permanent sets, owned wardrobes, and props—again, in keeping with the purpose of the coverage, which is to insure the filming process itself.
It is important to note, in these days of international film making, that the coverage territory is limited to within 50 miles of the United States, Puerto Rico, and Canada .
The final premium is based on a final report that the insured is required to furnish the insurer, including actual cost of the completed production, studios, laboratories, and cutting rooms used and the time the covered property spent at each of these locations. The final premium is then adjusted accordingly.
As noted above, the film coverage form may be changed from a reporting to a nonreporting form by adding the nonreporting endorsement, CM 45 01. When this is done, provision c. reports and premium, is replaced by a coinsurance provision. Under this provision, all covered property, except for property in transit, must be insured for at least 80 percent of the total value as of the time of loss, or be subject to a proportional loss settlement.
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