Here’s a topic that nobody finds exciting until it becomes a crisis: film production insurance. Specifically, how AI integration into production workflows is creating insurance questions that the Australian screen industry hasn’t fully addressed.

I spoke with two production insurance brokers and an entertainment lawyer about this, and the picture is more complicated than most filmmakers realise.

The Standard Coverage

Australian film productions typically carry several types of insurance: public liability, workers’ compensation, equipment insurance, errors and omissions (E&O), and sometimes negative film insurance (or its digital equivalent, media perils coverage). These policies are designed for traditional production workflows where humans create content using physical and digital tools.

E&O insurance is particularly important because it covers claims of intellectual property infringement, defamation, invasion of privacy, and similar legal issues that can arise from the content of the finished film. Without E&O coverage, most distributors won’t touch a film.

Where AI Creates Gaps

The problem with AI in the context of production insurance is that existing policies were written for a world where creative decisions were made by identifiable humans using deterministic tools. AI introduces uncertainty at several levels.

Copyright exposure. If AI tools used in production generate output that inadvertently infringes on someone else’s copyright, is that covered by the production’s E&O policy? The answer depends on the specific policy language, and many existing E&O policies don’t explicitly address AI-generated content.

AI image generation tools, for example, have been trained on copyrighted material, and there have been cases internationally where AI output closely resembles existing copyrighted works. If that output ends up in a film and the copyright holder sues, the production’s insurance coverage is uncertain.

Likeness and personality rights. AI tools that can manipulate or generate human faces and voices create exposure around personality rights and likeness claims. If an AI tool generates a character that resembles a real person closely enough to trigger a legal claim, the insurance implications are uncharted.

Technical failure. If an AI tool used in post-production produces flawed output that isn’t detected until after distribution, who’s liable? The tool vendor? The production company? The post-production house? And does the production’s insurance cover the cost of correction and re-distribution?

The Insurance Industry Response

Insurance brokers in the Australian screen industry are aware of these issues, but the policy products haven’t fully caught up. Most E&O policies now include general exclusions or conditions related to AI-generated content, but the specific coverage terms vary widely between insurers.

Some insurers are requiring production companies to disclose any use of AI tools in the production process as a condition of coverage. Others are adding specific exclusions for claims arising from AI-generated content. A few are developing specialist AI-related coverage products, but these are expensive and the terms are still evolving.

The practical impact is that productions using AI tools may face higher insurance costs, additional disclosure requirements, and potential coverage gaps that need to be managed.

What Filmmakers Should Do

First, talk to your production insurance broker about AI before you need to. If you’re planning to use AI tools in any part of the production process, disclose that upfront and understand what your policy does and doesn’t cover.

Second, document your AI usage. Keep records of which tools you used, what they produced, and how human creators modified or approved the output. This documentation could be crucial if a claim arises.

Third, review the terms of service of any AI tools you use. Some AI vendors include indemnification provisions in their terms. Others explicitly disclaim liability for the output their tools produce. Understanding where the vendor’s responsibility ends and yours begins is important.

Fourth, consider the IP clearance process for AI-generated elements. If an AI tool generates visual or audio content for your production, run it through the same clearance processes you’d use for any third-party material. This might seem excessive, but it’s prudent risk management.

The intersection of AI and production insurance is evolving quickly, and custom AI development specialists working with the screen industry recommend that production companies establish AI governance policies before integrating tools into their workflows, rather than sorting out the insurance and legal implications after the fact.

The Broader Picture

AI in film production isn’t going away. The tools will get better, cheaper, and more widely adopted. The insurance industry will eventually catch up with products designed for AI-integrated production workflows. But in the interim, Australian filmmakers need to be proactive about understanding and managing the risks.

The worst outcome would be a production facing an uninsured claim because nobody thought to check whether the AI tools they used created coverage gaps. A conversation with your broker now could save an enormous amount of trouble later.