Cancellation and Abandonment Insurance

For When the Show Just Cannot Go On

Advertising agencies and production companies run on pressured deadlines and tight budgets that require impeccable project management to stay on track. And while planning is typically done right down to the finest detail, the reality is that even with the best risk management measures in place, there’s always potential for something that is entirely unexpected and beyond human control to go wrong on set.    

This is where cancellation and abandonment insurance for advertising agencies and production companies is critical. “The insurance policy provides financial protection for advertising agencies and production companies that are forced to cancel, abandon or postpone a film shoot due to events such as bad weather, acts of God and other circumstances that are beyond the control of the team,” explains Promise Ngobeni, a Client Manager in Aon’s Commercial Risk Solutions division.

There are numerous consequences for advertising agencies and production companies to manage when there's a delay in filming, including:

• Increased costs - Delays in filming can result in increased costs due to the need to extend rental agreements for equipment, locations and crew, as well as potential additional expenses for rescheduling actors and other personnel. These extra costs can run into millions of (unplanned) Rands. 
• Missed deadlines - Delays in filming can result in missed deadlines for delivering the finished product to advertising agencies or production houses, which can mean missed launch or airing dates, in addition to seriously harming the professional reputation of the advertising agency or production company.
• Reduced quality - Rushed filming schedules resulting from delays can lead to reduced quality of the final product, as there may not be enough time to re-shoot less than perfect scenes or footage.
• Legal ramifications - In some cases, delays in filming can result in breach of contract or other legal issues, particularly if deadlines or other contractual obligations are not met.

“Cancellation and abandonment insurance is a type of insurance that provides coverage for financial losses incurred due to the cancellation or abandonment of a film shoot. It typically provides cover for the costs associated with non-refundable deposits, transportation costs, accommodation and other related expenses,” Promise explains.

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What is covered?

A cancellation and abandonment insurance policy provides cover for the following events:

• Adverse Weather Conditions - The insurance policy will provide coverage in the event that the shoot has to be cancelled or abandoned due to adverse weather conditions such as heavy rainfall, strong winds, cloud cover or snow.
• Acts of God - The policy will provide coverage for events such as earthquakes, floods or hurricanes that would lead to the cancellation or abandonment of a film shoot.
• Illness or Injury – Coverage is also provided if a film shoot needs to be cancelled due to the illness or injury of a person that is central to the film shoot, such as an actor, celebrity or spokesperson.
• Strikes, riots, political unrest or terrorist acts – The policy will provide coverage in the event of a film shoot being cancelled or abandoned under any of these circumstances as the teams would be unable to fulfil their duties.

A cancellation and abandonment insurance policy provides financial protection to advertising agencies or production company. “While there is not much we can do to prevent events that are beyond our control, it is possible to plan for them. The cost of implementing the cover is minimal, compared to the financial and legal ramifications of having to cancel or abandon a film project,” Promise warns.  

“One of the most important business conversations a film producer or film studio can have is with a professional risk adviser who specialises in the film and entertainment industry, and can objectively interrogate the nature of their business, its unique needs, reliance on its supply chain, the range of likely risks and how to mitigate the impact of such in a worst-case scenario with appropriately scoped insurance covers and risk management,” Promise concludes.

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