E&O INSURANCE - WHAT PRODUCERS NEED TO KNOW

Errors & Omissions insurance is a requirement for distribution deals with essentially any studio, streamers, and television or cable networks. So, E&O insurance is not optional for any independent TV or film production that seeks distribution.
What is covered? But I have noticed that there are many misunderstandings about what errors and omissions policies cover. Producers Errors and Omissions Insurance covers the potential legal liabilities and defense costs against lawsuits alleging unauthorized use of titles, formats, ideas, characters, plots, plagiarism, unfair competition, or privacy. It also protects against alleged libel, slander, defamation of character, or invasion of privacy.
What is not covered? E&O insurance is not blanket insurance coverage for every kind of error or issue that may arise as E&O insurance is designed for a very limited set of claims. If the claim is not defamation, copyright infringement, etc., then it probably is not covered.
Claims against the production company by partners, independent contractors, employees, and the like are not covered by these policies. Furthermore, breach of contract against the producer is not covered unless it is an implied-in-fact contract claim.
E&O policies will not cover a claim where a producer knowingly violated the rights of another. Also, they do not cover fraudulent acts against others.
E&O policies are designed to cover damages that the producer causes to others and the costs of defending against claims by others. They are not meant to cover the production's own losses. Thus, if someone gets an injunction against a film, the film's policy will not cover lost profits or production costs. (Some policies may cover advertising and related promotional costs, however.) The policy will also not cover any punitive (exemplary) damages awarded to the plaintiff.
It is crucial that producers understand that when filling out an application for E&O insurance, they are making representations to the insurer that form the basis for it agreeing to insure the project. If producers do not respond to the application's questions and instructions accurately, they risk the policy being unavailable if a claim does arise and the insurer determines the producers did not complete the application accurately.
E&O policies should be obtained sooner than later in the context of producing a project. The policy should be in place before any publicity or press releases regarding the project, and certainly, before any significant amounts are spent on preproduction or production.
If the policy is not already in place when producers become aware of a claim, that claim will not be covered. It’s like seeking flood insurance after your home has been flooded - no one is going to insure you. Most distributors will not accept E&O policies with any sort of special exclusions, so even small claims made prior to the purchase of a policy can turn into big problems.
Related to E&O insurance is obtaining copyright and title clearance reports regarding the script. Copyright reports are important because they tell producers about any conflicting assignments that may hinder or even destroy their right to use the underlying work. Not many script owners deliberately try to defraud a producer, but they may not fully understand previous option agreements or other contracts, or co-owners of the rights may already have assigned film and TV rights to someone else.
Ideally, producers should obtain a copyright report before purchasing a script, but producers will need to get a report before obtaining E&O insurance. Copyright reports sometimes reveal previously undisclosed transfers or licenses of copyright.
Producers should also obtain a title report once the project's title is chosen. Title coverage is normally free under an E&O policy, but it will not be offered without a recent title report for the insurance company's lawyer to review and approve.