Three Financial Concerns Every Film and Commercial Producer Should Plan For

Producing a movie, television program, commercial, or other entertainment project requires creativity, organization, and careful financial management. Even when a production starts with a well-planned budget, unexpected events can quickly increase costs and put the entire project at risk.

For producers, managing financial exposure is just as important as managing the creative side of production. A single delay, a damaged piece of equipment, or an overlooked expense can affect cash flow and potentially jeopardize the completion of the project.

 

At MovieInsure, we work with producers to identify risks before cameras begin rolling. Here are three major financial concerns producers should consider and how proper planning and entertainment insurance can help.

 

1. Production Delays Can Destroy a Carefully Planned Budget

Time really is money in the entertainment industry.

Every additional filming day can mean more expenses for cast, crew, equipment rentals, locations, transportation, accommodations, catering, and other services.

A production might be delayed because of a key cast member’s covered illness or injury, severe weather, property damage, or another unexpected event. Even a relatively short interruption can create a ripple effect throughout the production schedule.

 

How Producers Can Prepare

Build contingency funds into the production budget and develop backup plans for important locations, equipment, and schedules.

Insurance can also play an important role. Depending on the policy and circumstances, properly structured production insurance may cover certain losses resulting from covered interruptions.

At MovieInsure, we help producers understand these exposures before production begins and identify coverage options appropriate for their projects.

 

2. Equipment Damage or Loss Can Create Major Expenses

Cameras, lenses, lighting systems, sound equipment, drones, generators, and specialty rigs can represent a significant portion of a production’s budget.

Much of this equipment is also rented.

If a $50,000 camera package is damaged, stolen, or lost, who is financially responsible?

Rental agreements frequently transfer responsibility for equipment to the production company while the equipment is in its care. Producers should carefully review rental agreements and understand exactly what they are agreeing to before accepting the equipment.

How Insurance Can Help

Equipment insurance may provide protection for covered damage or loss involving owned, rented, and, when properly insured, borrowed production equipment.

 

Producers should make sure equipment values and rental requirements are accurately reported. Saving a small amount by underinsuring expensive equipment could create a much larger financial problem following a loss.

 

3. Cash Flow Problems Can Put the Entire Production at Risk

A production can be profitable on paper and still experience serious cash flow problems.

Producers often have to pay expenses before receiving financing installments, tax incentives, distribution payments, or other anticipated revenue.

Payroll still needs to be met. Vendors expect payment. Equipment rental companies send invoices. Locations require deposits. Travel expenses continue.

Unexpected expenses can make an already tight cash flow situation even more difficult.

 

Protect the Production Budget

Producers should create realistic cash flow projections in addition to an overall production budget.

Consider when money will actually arrive and when expenses must actually be paid. Maintain an appropriate contingency reserve and avoid committing every available dollar before filming begins.

 

Insurance should also be considered part of this financial strategy.

The purpose of insurance is not simply to satisfy a contractual requirement. Proper insurance can help transfer certain potentially significant financial risks away from the production company.

 

Insurance Is Part of Financial Planning

Producers sometimes look at production insurance as another line item they would like to minimize.

A better approach is to consider insurance part of the project’s overall financial risk management strategy.

Depending on the production, important coverages may include general liability, equipment, workers’ compensation, commercial auto, cast, excess liability, errors and omissions, and certain production-related coverage.

The correct combination depends on the project.

A small commercial filmed over two days presents very different risks from a feature film involving multiple locations, expensive equipment, large crews, vehicles, and well known talent.

That is why working with an entertainment insurance specialist can be valuable.

 

Protect Your Budget Before Cameras Roll

Successful producers do more than ask, “How much will this production cost?”

They also ask, “What could unexpectedly cost us money, and how are we going to protect ourselves?”

At MovieInsure, we specialize in entertainment insurance and understand the financial risks associated with movies, commercials, television productions, documentaries, and other entertainment projects.

 

We can help you evaluate your exposures and build an insurance program around the actual needs of your production.

Before cameras roll, talk with MovieInsure about protecting your production, your budget, and your investment.

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