Do I Need Errors and Omissions if I have an LLC for a Film?
As a filmmaker, you face a lot of challenges. Things like whether or not to form an LLC for each film, whether you need certain coverages over others, and how to negotiate projects. If you’re new to filmmaking and the idea of forming an LLC for each film that you produce, you might be wondering, “Do I need errors and omissions if I have an LLC for a film?” as this is a very common question that we see a lot.
The simplest answer is that each film that you produce for distribution will require errors and omissions insurance.
Thus, if you’re producing a film that you expect to get a distribution deal with? Or you’ve already got a distribution deal prior to production? Then you’re going to need errors and omissions insurance as part of the deal. Regardless of whether it’s an LLC or not.
Forming an LLC Keeps Liabilities Self-Contained
In determining whether you will need errors and omissions insurance for your LLC the answer is, YES! Regardless of whether they are part of an LLC or any other business. If all films are going to be distributed they will need errors and omissions insurance.
However, there are some benefits to having an LLC for your film when it comes to getting errors and omissions coverage.
When you’ve formed an LLC for your film, all of your important details regarding accounting, liabilities, and individual needs are self-contained for that film. There is no confusion as to a liability if an LLC for the production was formed at the start.
Thus, when you seek errors and omissions insurance, you’ll have a clear picture of the liabilities that you’re covering in your self-contained LLC that was created for the film.
How Errors & Omissions Works
Once you release a film, the risks for a lawsuit are increased ten-fold. Let’s say someone accuses you of stealing their idea, or their script, or their performance.
Any of this could, and frequently does happen in the film industry. But, errors and omissions insurance can provide protection.
This policy will provide protection from any possible errors in obtaining proper copyright licenses and rights to any area of the film. Or in the event that something was omitted from the chain of title, again you would be protected.
Why are Errors and Omissions Still Important for an LLC?
So, know that you know the answer to the question, “Do I need errors and omissions if I have an LLC for a film?” let’s take a look at why it’s so important.
When you form an LLC, you’re already taking the steps to segregate your assets and liabilities from those relative to the film you’re producing.
This is a great first step.
However, your LLC could still very well be sued. Like in the event that film is distributed and someone comes forward to state that you stole their idea.
Now, granted, with an LLC, they would not be able to take your private assets. They would only be able to sue against the assets of the LLC. But the idea is to have protection in the event that such a lawsuit is brought up.
This is why errors and omissions are still important, even if you form an LLC for your film. So that you, your LLC, and those involved in your film are protected should any legal situations like this arise.
