When a large film production company recently faced the threat of its film release being postponed, due to dispute over the creative rights of a particular song, it approached a law firm. However, with legal costs touching Rs 35 lakh, the producer feared this might over-shoot the budget. A financial crisis was finally avoided thanks to the fact the production house had purchased a media liability policy for the film.
Of late, insurers have been seeing a rise in demand for media liability policies. With rise in the litigations prior to the release of films, industry experts said that it has become crucial for film producers to take up these policies.
Media liability policy covers the legal and financial liabilities arising out of acts of errors of omission and commission by production houses, television channels and publishing houses. This covers not just the legal costs, but also the compensation (if any) that has to be paid to the other party.
This insurance protects these organisations against any damages one is legally liable to pay to a third party as a result of a claim for a wrongful Act committed or alleged to have been committed by a firm, in the professional life. It includes libel, plagiarism, invasion of privacy, hurting religious sentiments, trade-secret or slander by words/music written, spoken, audible or visual materials published or broadcast.
Sushant Sarin, senior vice-president (commercial lines), Tata AIG General Insurance, said that since each film has at least 5-10 creative rights involved in the production, it is imperative that these rights be protected. "There could be copyright claims against a production house in the court asking for a stay on the release. To avoid a stay, which will cause financial damage, production houses hire law firms to fight their case. This policy covers these expenses. Further, if the court awards some damages to the aggrieved party, which has to be paid by the production house, that amount is also paid for, by the policy."
He said there is an increase in demand for this cover, taking into account the number of litigations filed against the film producers in various courts. He added that while some production houses take insurance for one film, others may take insurance for the entire bouquet of films that they produce every year.
Film producers also take a cover to ensure that the film releases on time and the financial costs are met. A senior official with a public general insurance firm said that a film's budget could go haywire, if any controversy emerges before its release.
"This cover protects them from facing a financially difficult situation. The industry is seeing at least 30-35 per cent increase in demand, with regional films also being covered," he said.
Both public and private insurance companies including Tata AIG General, New India Assurance, Raheja QBE General Insurance, among others, offer this cover. Industry experts said that out of the 1,000-plus films produced annually, at least half of the films take media liability cover. The total premiums for a bouquet of 100 movies would typically range from Rs 7.5 crore to Rs 10 crore. While regional films are also covered, bulk of the business comes from Bollywood.
According to insurance experts, to avoid financial and reputational damage, producers may decide to go for an out-of-court settlement in certain cases, instead of waiting for the final court order. In these cases, too, the policy will ensure that the expenses are covered.
