#WFH: A Conversation with an Insurance Broker
Most of the articles and conversations about changes to insurance due to the pandemic have focused on production insurance and pandemic exclusions and the impact they have on production financing. However, there are other forms of insurance that have been impacted by the pandemic and the shift to working from home. To help producers navigate these issues, which are expected to be relevant for at least the rest of this calendar year, Now & Next contributor Kelly Lynne Ashton had a conversation with Diane Konecny, Executive Vice-President and Branch Manager with Front Row Insurance Brokers (Toronto).
Kelly Lynne Ashton: To what extent does existing office insurance (i.e. contents, general liability) govern employees working from home?
Diane Konecny: The production policies for a regular TV series, film or documentary aren't location specific in terms of coverage for contents. So those are basically covered for any property that's being used as an office for production. So that could be individuals’ homes. A lot of people have asked ‘What if people are using their own laptops?’ If someone is using their own property, then the policy requires the production company to be legally liable for it to be covered. All policies are different on how they word it, but basically, it's the same as if you're renting equipment from a third party, like from a rental equipment house. The insurance policy responds when the production company is legally obligated to provide coverage. So there needs to be something in a contract with the individuals making the production company responsible for that property.
Ashton: So that would mean including that in your standard deal memo.
Konecny: Yes. Not all production companies choose to do that. Typically, people are using their own laptops and that's the biggest item that's being used. Deductibles for laptops typically start at $2,500 though it depends on the policy. Some people's laptops would be under the deductible. The other thing is that some production companies have the feeling that the laptop is under the employee’s own control. It's at their house or they're carrying it around with them, if they're going anywhere, and the employee should be responsible. It's up to the production company as to whether they want to be responsible. If they do want to be responsible, then they need to have it in a deal memo, or some kind of contract.
The other side of things is that if it's not a production policy, so if it's an office package policy, that policy is location specific. If they've sent property home with individuals, be it edit suites, or basically any kind of computer equipment, even if some people have sent desks, chairs, that kind of stuff to make working from home more comfortable, then their policy needs to be amended to cover off any property that's not in the office anymore. If they've set up someone, and put a lot of property at someone's home, then they might want to schedule that location under their office package policy.
One of the things to remember is that under an office package policy, there's typically a vacancy clause, meaning that if the property is vacant for a certain number of days, usually it's 30 days, then the policy can be considered null and void, because there's no one going in to check to see if there's water damage, or there's a leak somewhere or anything like that. People need to remember that if their office is vacant, someone needs to go in on a regular basis to check to make sure everything's okay.
Ashton: Is there a minimum standard for what that means?
Konecny: There's not. Going in once a week and checking to make sure everything is in good order should be sufficient. Have some record of when it's being checked. Keep a log. It’s to have something to reference to the insurance company, should something happen.
Ashton: If the equipment at home is owned or rented by the company's central office, which insurance policy governs?
Konecny: On a person's personal home insurance or tenants insurance typically, they have an exclusion for property used for business purposes. If it's someone's own production company, and they're working from home, and they have a full office setup, they need to look at what their policy says in relation to business operations. Some insurance companies will add on a rider saying that they cover any office contents that are used for business purposes and there's usually an additional cost for that. Or they can purchase a policy specifically for a home office. But if someone's using their personal laptop for work is that considered a business operation for them? It’s going to depend on the insurance company.
Ashton: If there was an event, like a robbery of a home’s contents, which insurance policy would govern?
Konecny: You would typically be dealing with both insurance companies. They might ask for receipts or proof of ownership to exclude equipment from their policy. However, it should be easy to identify the equipment that belongs to a company.
Ashton: What additional coverage should employers consider purchasing because of the shift to work at home?
Konecny: One of the things that you probably see all over the news is a lot of cyber hacks. Companies might not think that they have a big exposure, but there is a greater risk when individuals are working from home, depending on what security they have on their own computers. Looking into a cyber policy might be a good thing if they have sensitive information that individuals are keeping on their laptops and if they aren't logging in through a VPN (virtual private network) that has additional security layers on it.
Ashton: Has the pandemic had an impact on insurance premiums?
Konecny: It definitely has on insurance policies across the board and not just in this industry. Deductibles have increased in a lot of places. Premiums and deductibles have come down somewhat from a big spike in March and April (2020), but I don’t foresee it going back to what people were used to seeing pre-pandemic. A lot of insurance companies have pulled out of certain areas so there is less competition. I also don’t foresee a change in the communicable disease exclusion. There are some specialty insurance companies in the U.S. offering pandemic coverage, at significant premiums, and we might see more of that.