Summary: The Film Coverage Form, CM 00 45 01 13, 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 11 98, and Commercial Inland Marine Conditions form, CM 00 01 09 04, to make a policy.

Topics covered: Introduction Insuring agreement Property not covered Causes of loss Collapse Exclusions Limits of insurance and deductible Additional conditions

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 is restricted to certain locations. When written on a nonreporting basis, form CM 45 01 09 00 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 (discussed later in this article). Specific productions to be covered must be scheduled in the declarations, along with a limit of insurance for each production.

The form covers the following property:

·exposed motion picture film—not blank—and its sound track or other sound record

·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 (CM 45 01) for use with insureds whose insured property is not subject to frequent fluctuations in value.

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 form, covered property does not include coverage for cut-outs, unused footage, positive prints or films, or library stock. The form is designed for the film production process; once that process is complete, coverage ceases (see the later discussion on the policy period). As is common with inland marine forms (and, indeed, with 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 direct physical loss or damage to Covered Property except those causes of loss listed in the Exclusions.

Analysis

The 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

The coverage provided under this Additional Coverage – Collapse applies only to an abrupt collapse as described and limited in Paragraphs a. through c.

a.For the purpose of this Additional Coverage – Collapse, abrupt collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.

b.We will pay for direct physical loss or damage to Covered Property, caused by abrupt collapse of a building or any part of a building that contains Covered Property insured under this Coverage Form, if such collapse is caused by one or more of the following:

(1)Building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse;

(2)Insect or vermin damage that is hidden from view, unless the presence of such damage is known to an insured prior to collapse;

(3)Use of defective material or methods in construction, remodeling or renovation if the abrupt collapse occurs during the course of the construction, remodeling or renovation;

(4)Use of defective material or methods in construction, remodeling or renovation if the abrupt collapse occurs after the construction, remodeling or renovation is complete, but only if the collapse is caused in part by:

(a)A cause of loss listed in Paragraph (1) or (2);

(b)One or more of the following causes of loss: 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;

(c)Weight of people or personal property; or

(d)Weight of rain that collects on a roof.

c.This Additional Coverage – Collapse will not increase the Limits of Insurance provided in this Coverage Form.

Analysis

The additional coverage for collapse was substantially revised in 2010. The form provides coverage for direct physical loss or damage to covered buildings or any part of a building that contains covered property caused by an abrupt collapse as described. The prior policy did not specify that the collapse must be abrupt. "Abrupt collapse" is defined as an abrupt falling down or caving in of a building or any part of a building with the result that the building cannot be used for its intended purpose.

The perils of decay or insect or vermin damage hidden from view and unknown by the insured, and use of defective materials or methods in construction or remodeling as long as the collapse occurs during the course of the construction or remodeling remain the same.

The perils of 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, weight of people or personal property or weight of rain collecting on a roof apply only if defective materials were used in construction and the building collapsed after construction was finished and if the collapse was in part caused by one of the listed perils. This significantly narrows the covered perils for collapse if the collapse does not occur after the course of construction with defective materials.

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

Nuclear reaction or radiation, or radioactive contamination, however caused.

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 (including theft) committed by:

(1)You, any of your partners, employees (including temporary employees and leased workers), officers, directors, trustees, or authorized representatives;

(2)A manager or a member if you are a limited liability company; or

(3)Anyone else with an interest in the property, or their employees (including temporary employees and leased workers) or authorized representatives;

whether acting alone or in collusion with each other or any other party.

This exclusion applies whether or not an acts occurs during your normal hours of operation.

This exclusion does not apply to acts of destruction by your employees (including temporary employees and leased workers) or authorized representatives, but theft by your employees (including temporary employees and leased workers) or authorized representatives 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.

k.Theft by any person (except carriers for hire) to whom you entrust the property for any purpose, whether acting alone or in collusion with any other party.

This exclusion applies whether or not an act occurs during your normal hours of operation.

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, including any of the following conditions of property or any part of the property:

(1)An abrupt falling down or caving in;

(2)Loss of structural integrity, including separation of parts of the property or property in danger of falling down or caving in; or

(3)Any cracking, bulging, sagging, bending, leaning, settling, shrinking or expansion as such condition relates to Paragraph (1) or (2).

This Exclusion d. does not apply to the extent that coverage is provided under the Additional Coverage – Collapse or to collapse caused by one or more of the following: 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; weight of people or personal property; weight of rain that collects on a roof.

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 nuclear hazard exclusion has been changed and no longer references nuclear weapons; nuclear reaction, radiation, or radioactive contamination include the results of a discharge of a nuclear weapon.

The collapse exclusion was greatly changed 2010 The prior policy edition simply stated that collapse was excluded except for the coverage provided in the additional coverage section of the policy. Now "collapse" is defined as an abrupt falling down or caving in, and includes loss of structural integrity including separation of parts of the property, bulging, cracking, sagging, settling as relates to loss of integrity or abrupt falling down or caving in. The same exception for coverage provided under the collapse additional coverage section exists. This provides coverage for the standard perils that are listed, such as of fire, lightning, windstorm, and hail, but only if they cause a loss in conjunction with defective construction materials.

The 2013 edition of the form made changes to the dishonest acts exclusion—the exclusion specifies that theft is included as a dishonest or criminal act; the term "employees" includes temporary and leased workers; the exclusion applies to officers; and with the exception of theft, the exclusion applies to authorized representatives of the insured. The 2013 revision also added 2.k, which excludes theft by any person to whom the insured entrusts property (except carriers for hire). This represents a broadening of coverage as previously dishonest and criminal acts committed by those to whom the insured entrusted property were excluded—the excluded act by those persons is now narrowed to just theft

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.

The due date for any additional premium is the date shown in the bill.

Analysis

The valuation condition 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 fifty 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 previously noted, 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.