AAIS NEGATIVE FILM COVERAGE
ANALYSIS
(August
2025)
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IM 1305–Schedule of Coverages–Negative
Film IM 1300–Negative Film Coverage Analysis
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The American
Association of Insurance Services (AAIS) offers Negative Film Coverage, which
protects negative film and media from direct physical loss or damage. This
coverage specifically applies to film that has been exposed and qualifies as motion picture film,
video, or magnetic tapes after recording, including sound recordings. It is
important to note that this coverage is based on productions
rather than locations.
Commercial businesses
and non-profit organizations that film, videotape, or record sound are eligible
for this product. Coverage is provided for direct damage to exposed (negative)
film, tapes, or records occurring after production has been properly recorded.
AAIS Negative Film
Coverage requires at least these four forms:
Related Article: CL 0100 AAIS
Commercial Lines Common Policy Conditions
This Schedule of
Coverages is used with IM 1300–Negative Film Coverage. IM 1305 contains the
following information:
Limits and premiums are
entered based on the production details, the production date, and the media
being covered.
The deductible amount
retained by the insured for each covered loss must be entered in the designated space.
Three optional
endorsements are available, and entries are required on the schedule of
coverages when they are used.
This endorsement
restricts coverage to exposed film and similar property belonging to others,
but only when located at studios, laboratories, cutting rooms, and vaults
within the specified premises and location outlined in the coverage schedule.
Items that are in transit to or from these designated locations are also
covered.
This endorsement only
applies to exposed motion picture property stored in a specified vault. The
type and location of the vault must be noted in the designated areas on the
coverage schedule.
When this endorsement
is attached and selected on the schedule of coverages, the coverage is provided
on a non-reporting basis and subject to 80% coinsurance.
Coverage can be
provided on either a reporting or non-reporting basis.
If you choose coverage
on a reporting basis, you will need to include the deposit, the minimum
premium, and the reporting rate per $100 in the schedule of coverages under the
rates and premium section. Additionally, if you select the reporting basis, the
schedule will note that any additional premium incurred after the expiration,
based on submitted reports of value, is due on the date indicated on the
billing invoice.
Alternatively, if you
opt for a non-reporting basis, please fill in the annual premium and the
non-reporting rate per $100 in the designated fields for non-reporting on the
schedule of coverages form.
This analysis pertains
to the 01 05 edition.
This section explains that the insurance company will provide the
specified coverage in exchange for the premium paid by the named insured. This
agreement adheres to all terms outlined in the coverage form, the schedule of
coverages, and any applicable additional conditions. Any endorsements or
additional schedules mentioned in the schedule of coverages are also included.
Certain words and phrases, highlighted in bold in the coverage form, are
defined in the Definitions section immediately following this Agreement.
Defined terms are used
throughout the coverage form. When these terms appear in the coverage form, the
meanings provided in this section must be applied.
NOTE: The Editors added
titles to enhance clarity.
These
are parties specifically named on the declarations as insureds.
This
definition refers to the insurance company providing the insurance
coverage.
The applicable coverage
amount.
Any page labeled
with coverage information, including declarations or supplemental declarations.
A sinkhole is formed
when the earth’s surface suddenly collapses into an
underground cavity created by water erosion of limestone or other types of
rock. This definition focuses solely on the physical occurrence of sinkhole
collapse and does not consider the value of the land or the costs associated
with filling sinkholes.
The definition contains the following specifically named
perils:
Two terms require
further clarification:
This coverage does
not extend to personal property stored outdoors. Additionally, it does not
cover damage to the interiors of buildings or personal property stored inside
buildings unless a falling object first breaches the building's exterior.
This refers to the
sudden or accidental release or leakage of water or steam. However, it must directly result from a crack or break in
a part of the system or appliance that contains the water or steam.
Terms
Volcanic Action
An airborne volcanic blast or shock wave, which
also includes ash, dust, and particulate matter, as well as any lava flow. However,
this term does not include the expenses for removing dust, ash, or particulate
matter from the covered property unless there is direct physical
damage to the property.
The insurance company
will provide coverage for the property detailed below, unless specific
exclusions or limitations apply.
This policy covers the named insured’s motion
picture film and similar property belonging to others while it is in the
insured’s care, custody, and control, for direct physical loss or damage caused
by a covered peril.
Coverage is restricted to the insureds' exposed motion picture film and
similar property of others in their care, custody and control as follows:
a. Exposed motion picture film containing the film's soundtrack
or any other audio recording.
b. Magnetic tape or
videotape, along with its soundtrack or other recorded sounds, is included in
this coverage limitation. Similar to exposed film,
coverage applies only after it has been reviewed and played back to ensure
proper recording, and it must be listed in the production schedule.
NOTE: Magnetic tape is
generally used for storing sound recordings and images. Videotape comes in
various formats, such as VHS and Betacam, and is used to record moving images
as a sequence of frames that can then be edited and played back.
There is no coverage
for the following property:
The term “Cut-Outs” is
not defined in the policy; however, coverage for it is not available. In video
editing, this term describes a technique where a specific portion of the video
is removed, cut out, and eliminated.
NOTE: Since this term is not clearly
defined, we suggest requesting a written
definition of "Cut-Outs" from the insurance company underwriter.
The term "Library
Stock" is not defined in the policy; however, coverage for it is not
available. Library Stock typically refers to pre-existing film or video footage
that can be licensed for use in the insured's own production.
NOTE:
Since this term is not
clearly defined, we suggest requesting a written definition of "Library
Stock" from the insurance company underwriter.
The term "Positive
Print" is not defined in the policy; however, coverage for it is not
available. Generally, a Positive Print refers to a photographic image where the
colors and tones accurately represent the original scene that was photographed
or filmed.
In Negative Film, the
light and dark colors and tones are reversed. When light is shown through the
negative onto photo paper and developed, the negative image is reversed, and a
Positive Print can be seen.
NOTE: Since this term is not clearly defined, we
suggest requesting a written definition of "Positive Prints" from the insurance company underwriter.
The term "Unused Footage"
is not defined in the policy; however, coverage for it is not available. One
definition of Unused Footage refers to film or media recorded during a
production but does not appear in the final edited version.
Coverage applies to risks of direct
physical loss unless the loss is limited or caused by an
excluded peril.
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Example:
Middle of the
Earth Films Limited had spent two years working on a film, which was finally completed.
Marketing initiatives had started, and a premiere was scheduled, when a
scandal involving the lead actor emerged. The studio considered canceling the
release, but the director suggested reshooting the film with another actor.
The cast agreed with this plan, and the movie was ultimately released as
scheduled. The studio requested coverage under this coverage form,
but the claim was denied because the reputation of the lead actor was not a
direct physical loss to the negative film. |
This
is coverage for loss to property caused by the collapse of any building or
structure containing covered property due to a
direct physical loss.
Coverage for collapse is provided when caused by one
or more of the following:
The
following buildings and structures are not considered to be in a
state of collapse:
The covered property
limit does not increase for this coverage.
The first group of exclusions is
essentially absolute. Subject to specific exceptions, loss or damage by
each is entirely excluded, regardless of any other cause or event contributing
to a loss, either concurrently or in any other sequence. The insurance company
does not pay for any direct or indirect loss or damage caused by or resulting
from any of these events.
The insurance company does not
cover loss or damage caused by any act of war.
This includes undeclared wars, civil wars, or warlike actions by military
forces, all of which are considered war. Additionally, measures taken to hinder
or defend against actual or expected attacks by any government or sovereign
authority using military personnel or agents are also classified as war
and are not covered.
In addition,
acts of insurrection, rebellion, revolution, or unlawful power seizure, along
with any government measures to prevent or defend against these acts, are
excluded. If any such action involves nuclear
reactions, radiation, or contamination, this exclusion overrides the nuclear
hazard exclusion.
Loss caused by any acts or decisions by
individuals, organizations, or government entities is not covered, including
failures to act or decide. However, if such actions or inactions result in a
covered peril, then the losses or damages from that peril will be covered.
Loss or damage caused by contamination or deterioration,
including corrosion, decay, fungus, mildew, mold, rot, and rust, is not covered. However, if such deterioration leads to a
covered peril, the resulting damage is included.
Coverage does not apply
to loss caused by or resulting from criminal, fraudulent, dishonest, or illegal
acts committed by any of the following, whether alone or in collusion with
others:
·
The
named insured.
·
Others
with an interest in the property.
·
Others
to whom the property has been entrusted.
·
The
named insured's partners, officers, directors, trustees, joint venturers,
members or managers, as applicable, based on the named insured’s type of
business organization.
·
Employees
of any of the groups listed above. Employees are excluded even if the act
occurs when they are not considered to be working.
o Coverage applies if
employees destroy property. It does not apply if employees steal.
However, this exclusion
does not apply to covered property in the care of a carrier for hire.
When loss or damage is caused by a
chemical used in developing film, there is no
coverage. Damage caused by laboratory work is also excluded.
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Example: Don's Documentaries is working on a
documentary about whitewater rafting, with much of the filming
taking place on wild rivers. After shooting some footage, Don safely delivers
the film to the development lab. However, the technician mistakenly uses the
wrong chemicals during the developing process. As a result, while the film is
not completely ruined, it cannot be used. This loss is not covered, and Don
must reshoot the footage. |
Loss or damage occurring during the
processing of film, such as developing, cutting, or printing a film project or
tape, is not covered.
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Example: The
next day goes smoothly. Don finishes the shoot early in the day and safely takes the film to the lab. Once it is developed, the
editors review the footage and select the portions they want to keep. However,
the cutting room technician misunderstands the editors’ instructions and keeps
the part of the film they want discarded. Even worse, he discards the part of
the film they want to keep. This exclusion eliminates coverage for the
cutting room’s mistake. |
Coverage does not apply to loss or
damage caused by electric or magnetic injury, disturbance, or erasure of
electronic recordings or videotape. The only exception is when such damage is
due to lightning.
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Example: Finally,
the whitewater rafting documentary is complete—developed,
processed, edited, and “in the can!” Don secures it in the lab and departs. However, a fierce spring storm approaches, and
lightning strikes an electric transformer on the property. This power surge
causes an ultraviolet lamp left on in the lab to short-circuit, igniting the
volatile chemicals stored there. The facility ultimately burns to the ground.
Coverage applies since lightning was the proximate cause of the incident. |
When negative film is exposed
to light, it becomes ruined. This type of loss or damage is not covered.
Loss
or damage resulting from errors, faults, or defects in planning, zoning,
surveying, site plans, grading, compacting, land use, or development is not
covered under this policy. Additionally, any loss caused by errors, faults, or
defects related to property design, blueprints, specifications, workmanship,
building, maintenance, installation, renovation, remodeling, or repair is also
excluded. This exclusion applies regardless of whether the property is covered
by this policy, whether the incident occurs on or off the designated premises,
and regardless of any negligence involved.
However, if one of
these events results in a covered peril, then the loss or damage caused by that
peril is covered.
There is no coverage for loss resulting from delay, loss of
use, or loss of market.
Coverage is not provided when dryness, dampness, humidity, or
temperature fluctuations cause or result in loss or damage to covered property.
However, this exclusion has an exception: if any of the above lead to a covered
peril, the loss or damage from that peril is covered.
Coverage does not apply
if a loss occurs due to the property being transferred to someone else or sent
to a different location based on unauthorized instructions.
There is no coverage for loss to covered property
voluntarily given to others, even if the surrender is due to a fraudulent
scheme, trick, or false pretense.
Loss or damage due to weather conditions is excluded, but
only when the loss is caused by a weather condition combined with a cause of
loss excluded in 1. Primary Exclusions above. However,
if weather conditions result in a covered peril, then the loss caused by that
peril is covered.
The named insured must
promptly notify the insurance company or its agent of a loss. The notice must
include a description of the property lost or damaged. If a criminal act caused
the loss, the appropriate law enforcement agency must also be notified. The
insurance company may specify the notice be provided
in writing.
During and after a
loss, the named insured is required to take all reasonable steps to prevent
further damage to covered property. The insurance company will cover reasonable
costs incurred by the insured for this purpose, provided they maintain accurate
records to verify the costs. The expenses are part of the policy limits and not
in addition to them.
However, there is no
coverage for repairs or emergency measures taken for property not already
damaged by a covered peril.
NOTE: It
is important to realize that any such costs incurred will reduce the
amount available to pay the actual loss.
The named insured must
complete and return the insurance company's required proof of loss forms within
60 days of the company’s request. The information provided must be signed by
the insured and include the
time, place, and circumstances of the loss, as well as details on any other
insurance coverage that may apply.
The proof of loss must
also include the named insured’s interest and the interest of others with
respect to the property involved, including liens and mortgages. Any changes in
the title to the property during the policy period must be
disclosed, in addition to providing any other reasonable information, including
inventories, specifications, and estimates the company may require in settling the loss.
Examination of the
named insured under oath may be required in matters related to the loss. The
insurance company may request these examinations more than once, but such
requests must be reasonable. If multiple persons are
examined, the company has the right to examine each
individual separately.
The named insured must
produce any records related to the loss. The insurance company must be
allowed to make copies and extract information from these records as often
as it reasonably requests. Such records include, but are not limited to, tax
returns and bank microfilms of all related canceled checks.
Both damaged and
undamaged property must be made available for the insurance company’s
inspection as often as reasonably necessary. It must also be
allowed to take samples of the property and to inspect it.
The named insured has
the right to make payments, assume obligations, pay or offer rewards, or incur
other expenses. However, unless the insurance company has given
written approval for such actions, the named insured cannot expect any reimbursement.
The only exception is if the costs involve protecting property, as detailed in
item 2. You Must Protect Property above, which will be covered by the insurance
company.
The
insurance company determines when and if it will assume ownership of the
property belonging to the named insured. As a result, the named insured is not permitted to abandon
damaged property to the insurance company unless they receive written approval
to do so.
The valuation of covered property is outlined below and subject
to items 2. Pair or Set
and 3. Loss to Parts below:
The value of covered
property at the time of loss or damage is the cost to repair or reproduce the
lost or damaged property. It is also the reduced value of undamaged portions of
the production.
The expenses related to
the story, scenario, music rights, continuity, permanent sets, props, and
wardrobes owned by the named insured are not included as part of the valuation.
Related Article: AAIS
Theatrical Property Coverage
The value of a loss involving
damage or loss of one item of a pair or set is based on a reasonable
proportion of the value of the entire pair or set. However, the loss of one
part of a pair or set is not considered a total loss.
NOTE: This recognizes that the value of the
whole is greater than the value of individual parts, but the remaining parts
still have value as a separate.
The value of a lost
or damaged part, which comprises several parts, is determined by the cost to repair or replace only the lost
or damaged part.
The insurance company does not
pay more than the named insured’s insurable interest in the covered property at
the time of loss.
The insurance company pays only
the amount of loss exceeding the deductible amount shown on the schedule of
coverages.
The insurance company
pays the least of the following, subject to 1., 2.,
4., and 5. in this section:
o
The
material must be of like kind and quality or as similar as practicable.
Two or more coverages in the coverage form may cover the same loss. In
that case, the insurance company does not pay more than the actual value of the
claim, loss, or damage sustained.
The named insured might
have another policy under the same terms and conditions as this coverage form.
In that case, this coverage form pays only its portion
of the covered loss. That portion is the ratio of its insurance limit to the
total limits of all insurance covering the same exposure.
There may be other
coverage available to pay for the loss, other than as described in item 5. a.
above. In that case, this coverage form pays on an excess basis. It will only pay
the amount of the covered loss exceeding the amount provided by the other policy,
regardless of whether it can be collected or not. Any payment made is subject
to the applicable insurance limit.
The insurance company has the following loss payment
options in the event of a covered loss.
·
Pay the value of the property
that sustained loss or damage.
·
Pay the cost to repair or
replace the property that sustained loss or damage.
·
Rebuild, repair, or replace the
property with similar property, to the extent possible, and it must be
accomplished within a reasonable time period.
·
Take any part or all the
property based on the value agreed upon or determined through appraisal.
The insurance company is required to inform the named
insured of its intent to rebuild, repair, or replace within 30 days of
receiving a properly completed proof of loss.
The insurance company settles
all claims with the named insured. It will also pay the named insured, unless a
loss payee is listed on the policy.
The insurance company
pays a covered loss within 30 days of receiving properly prepared proof of loss,
provided the loss amount has been established. The
amount is determined either through a written agreement between the company and
the named insured or after an appraisal award is filed with the company.
The insurance company
can adjust and pay losses involving others' property to either the named
insured on behalf of the property owner or directly to the property owner.
The insurance company
is not obligated to pay the named insured when it pays the property owner.
Additionally, if the property owner sues the named insured, the company has the
option to defend the named insured in that lawsuit.
The insured is required
to submit reports in writing. The report should reflect the last day of
shooting for each covered production. This report should include the
production’s actual costs, overhead, and associated expenses.
The insured must submit
reports to the insurance company within 30 days following the last day of
shooting for each production.
The deposit premium for
each covered production is an estimate and may be subject to adjustment later.
The actual earned premium is determined by multiplying the total reported
amounts for each covered production by the applicable rate. After this calculation,
the actual premium is compared to the deposit premium.
If the actual premium
exceeds the deposit premium, the insured pays the difference to the insurance
company. If it is less, the insurance company refunds the difference to the
insured. Any return premium is subject to the minimum premium.
Either party can request an appraisal to determine the
value of a disputed claim. Once requested, both parties have 20 days to obtain
their own independent appraisers and notify the
other party of their appraiser's name. The two appraisers then have 15 days to
select a competent impartial umpire. If they cannot agree on an umpire within
that time, either party can request a judge in the court of record, in the
state where the property is located, to appoint one.
The appraisers then determine the claim’s value and submit
any disagreements to the umpire. Once any two of the three parties agree (the
two appraisers and the umpire), the loss amount is final.
Each party is responsible for paying its own appraiser,
while the costs associated with the umpire and other expenses are equally
divided between both the insurance company and the insured.
The insurance coverage provided
does not directly or indirectly benefit any party with custody of the named insured’s
property.
Any condition in this coverage
form conflicting with any applicable law is amended to conform to that law.
This condition is applicable only when the
insured is an individual.
When the named
insured passes away, the individual in possession of the insured’s property
remains an insured for that property until a qualified legal representative is
appointed. After such a representative is designated, they assume custody, but
only for the property covered under this policy.
This coverage does
not extend past the policy’s expiration date.
A revision of this
coverage form or a relevant endorsement enacted during the policy period or
within six months of the coverage's effective date may broaden coverage without
additional premium costs. In such cases, the broadened coverage will apply to this
coverage.
This coverage is void if any
insured at any time willfully concealed or misrepresented
a material fact that relates to the insurance provided, the property covered,
or its interest in the property. It is also void if any insured engaged in
fraud or false swearing with respect to the insurance provided or the property
covered.
NOTE: The named insured must
deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a
material fact or information. This means the insurance is treated as simply
having never existed, versus a particular claim being denied.
Only covered losses occurring
during the policy period are paid.
Payment of the loss
does not end the obligations of the named insured and the insurance company
toward one another. Additional provisions apply if the insurance company pays a
loss and the lost or damaged property is later recovered, or the parties
responsible for the loss reimburse the insurance company for the damage.
Either party recovering
property or payment must notify the other. Recovery expenses incurred by either
party are reimbursed first. If the named insured keeps the recovered property,
they must refund the amount the insurance company paid on the claim, unless the
company agrees to a different amount.
If the claim paid is
less than the agreed-upon loss due to the application of a deductible or other
limit, any recovery is prorated between the named
insured and the insurance company, based on the company's respective interest
in the loss.
Payment of a claim does not
reduce the limit available for future claims.
The insurance company
acquires the named insured's rights of recovery from third parties after paying
a loss. The named insured must assist the company in securing those rights. The
insurance company is not required to pay the loss if the named insured hinders
or impairs its rights of subrogation.
The named insured has the right
to waive recovery rights in writing from any party, provided they do so before
a loss occurs.
The insurance company
cannot be sued by anyone for coverage until all the terms of the coverage form
have been fulfilled. Lawsuits must be filed within two years after the named
insured first becomes aware of the loss. If a state law renders this condition
invalid, any lawsuit filed must comply with that law’s
provisions and be initiated within the shortest period permitted by law.
NOTE: It is common
for a basic coverage form to be modified by mandatory state-specific
endorsements that address issues relevant to that state.
Coverage applies only
if the covered property is located in the United
States, its territories and possessions, Canada, Puerto Rico, or within 50
miles of any of these locations.
AAIS has developed three
endorsements to use with Negative Film Coverage.
Coverage applies only
when the covered property is located at studios, laboratories, cutting rooms,
and vaults as described on the schedule of coverage. Items in transit between
these locations are also covered.
This restriction modifies the policy to provide
protection for exposed motion picture property only while it is stored in the
specified vault. The type of vault and its location must be entered in the spaces provided on the schedule of coverages.
When this endorsement
is attached and selected on the schedule of coverages, the coverage is written
on a non-reporting basis and subject to 80% coinsurance.
The biggest issue, which causes the
greatest concern, is: where is the film? Who manages it and is responsible for
its care? How often is it moved, and in what way? Where is it stored when not
in use? Films and videos are highly vulnerable to loss or damage from fire,
smoke, and water. Additionally, some films may be highly sought after and at
risk of theft. Each film is unique, and many factors and concerns need to be
evaluated and addressed.