A Completion Bond is a Film Investor Insurance. Some call it "Completion Guarantee" or "Bond". In the Entertainment Industry it protects a Film. The Insurance Product acts as a financial guarantee. This security benefits the providers of a film's finances.
A Film Bond guarantees delivery of a Film on Budget and on Schedule. The Completion and Payment Guarantee makes sure the project will be completed. It covers exceeded Budgets and delayed Delivery. The Guarantor will assume many of these related risks.
An independent film production takes time to mature. This is never a spontaneous event. A Film Production combines strategy, planning and substantial funding. Investors expect a financial benefit from the Film. The Insurance Company provides security for the Investors.
It is a line of defense against problems arising during production. The Completion Bond provides solutions to many of those issues presented.
A Film Completion Bond is a three-party contract framework.
The protected film investors might receive claim compensation. In Completion Guarantee terms they are Beneficiaries/Loss Payees.
The term Financier does not only recognize Private Investors, but it expands into Debt Financing, Gap Financing, Film Funds (Tax Incentives, Tax Credits), or even investments made for Product Placement.
Issuing a Bond signals that a film project in question might be sound. The non-issuance of a Bond can be a warning towards the project.
A Completion Bond protects investments into a movie in 4 different ways:
There are 5 major steps to a Bonded Movie:
For Film Completion Bond Insurance you (the project owner) approach a Broker. You can talk to one of our Completion Guarantee Brokers below. Else contact your trusted Media Broker who typically supplies your FPIs. A search engine will provide an Entertainment Broker in your country.
The Broker starts the conversation on this European offer for Film Bonds.
The Bond Guarantor tasks the Risk Management with an assessment of the production. Some of the first documents that are looked at are:
Underwriting has 4 phases:
A Film Completion Bond oversees the financial make-up of a Production. It is an audit of the full Production. This includes monitoring Pre-Production, Post-Production and Delivery. Monitoring Production and Delivery is a continuous process. During the Period of Cover the Insurer requires constant information. Guaranteed Completions' Risk Management Team acts as this Supervising Entity.
The Completion Guarantor can provide additional funds to Complete and Deliver the bonded film. Otherwise it can abandon the Production. Abandonment might lead to repayment of spent funds. Parties will receive payment to the extent covered by the Completion Bond.
Delivery on Time is part of a Completion Guarantee cover. The Completion Guarantor has legal power to control the Delivery. It secures the timeline the Investor agreed to in the first place. Delayed Delivery resulting in non-payment of a Distributor can become a Bond claim.
Delivery to various Distributors follows Post-Production. Delivery includes audio-visual files and supplemental records. The industry calls insured items "Bonded Delivery Items". A Distributor's non-acceptance triggers a Guarantor's liability.
Acceptance in a technical fault-free state is important to Financiers. Distributor's final payment obligations are contingent on it. This returns substantial rates of production loans.
Accepted Delivery concludes a Guarantor's duty.
Corona is not part of what a Completion Bond covers. Right now there is no insurance product worldwide known to us, which insures against Covid-19.
As long as the Production adheres to local Government guidelines, protects its crew, plans for enough time and budgets for Corona-related costs, there is in general nothing preventing it from receiving a Completion Bond cover.
The cost of a Completion Bond is bound to several factors:
On top of the Insurance Premium, the Broker has to charge local Insurance Tax. Insurance Tax is non-deductible. It should be part of your planned budget from the beginning.
Producers requiring Completion Bonds are normally in touch with the Risk Management 6-9 month before start of principal photography. Due Diligence on an independent film production takes 2-3 month. Rarely Completion Bonds can be acquired in a matter of 4 weeks.
If your Budget is higher - no worries - let's talk.
All kinds of audio-visual Productions can benefit from a Film Bond:
Excluded are Short Films, Commercials, Music Videos and Video Games.
To get a Completion Bond the Producer or Line Producer should approach an Entertainment Insurance Broker.
A Bonding company requires that the production protects itself against the most common risk occurrences by getting production insurance cover for at least the following:
Other terms used for these by your Broker might be:
Also the two above mostly apply to commercials and short films, not to feature film productions or TV series.
Your Film Insurance Broker will be able to quote you the cost, coverage and application details, as well as give you an in depth understanding of deductibles, exclusions and Covid precautions.
While a Film Bond caters to the financial interest of the Investors and Lenders, what is not guaranteed is the quality of a Production nor its financial success at the Box Office.
A Film Completion Bond is available globally. Some Countries are difficult because of their Country Risk (either political or financial). Most global co-productions have a partner from Europe (Germany, Netherlands, Spain, Italy, France), the UK, the United States or Canada.
Completion bonds have their origins in one of their primary uses - the construction industry. The insurance protects construction loans by guaranteeing the builders complete construction on time and on budget. They are called construction bonds or performance bonds.
The Bond Issuer is often called Guarantor.
In connection to Film and TV most time "Completion Guarantee" is used to describe the coverage given to production companies.
The category of completion bonds is sometimes described with different terms as follows: