Major insurers are unwilling to take on the risk of production delays and shutdowns in the pandemic.
A lack of easy availability of independent film insurance amid the pandemic has added a new level of challenges to the substantial effort of lining up financing.
Finding coverage to cover interruptions as a result of COVID-19 has become painful for these creators.
The primary challenge with independent film insurance is that while major insurers are hesitant to sell it, lenders require it. It has made the situation difficult enough that many productions have been forced to shut down as financiers worry about the risk of massive losses due to the ongoing pandemic crisis.
Small filmmakers used to find that business interruption insurance was readily available to them. However, COVID-19 is a new situation, as well as being one that is difficult for insurers to assess. Therefore, unless producers are working with a big-name studio, they are struggling to find the coverage – and therefore the funding – they need to get their productions off the ground.
Independent film insurance used to cost $400,000 or more before the pandemic struck.
Now that we are nearly a year into the pandemic, the policies are difficult to obtain in the first place, and those that can be found don’t cover as much.
“We’re in an insurance crisis right now,” said entertainment practice Arthur J. Gallagher & Co. managing director Brian Kingman. The practice brokers policies in the entertainment industry.
Production has been plummeting this year. Moreover, this isn’t the only time businesses have faced this type of a challenge. When the SARS outbreak occurred in Asia in 2003, insurers wrote exclusions into many of their business interruption policies. However, at that time, TV and film were mainly spared from those exclusions.
This year, independent film insurance companies are including their products among the business interruption insurance policies facing those limitations. Until a vaccine becomes widely available, coverage providers have said that government support is the only way the industry will get a kickstart. US Representative Carolyn Maloney (D-NY) has proposed that a solution similar to that created for terrorism risk following the attacks on Sept 11, 2001 could be created. The Pandemic Risk Insurance Ask would put a federal 
backstop in place for pandemic-related business interruption policies. Though the bill has not yet passed, Maloney is still pushing for it.
