Erin L. Webb
On August 28, 2014, I presented with insurance broker Sara Owens of GNW Evergreen, a division of HUB International, at PAX Dev in Seattle, Washington. PAX Dev is a conference devoted to the video game developer community and the topic of game making. Conference tracks focused on programming, design, business, art, music and more.
During our session, which was part of the business track, we talked about basic insurance concepts relevant to developers and publishers in the video game industry, including how to buy insurance and what to do in the event of a loss.
We also explained the importance of working with a knowledgeable broker who can navigate an insurer’s need for specific information about a company so that it can appropriately underwrite and price the risks that the company faces. This is particularly important given the relative inexperience that many insurers have with the business of game making, which can lead them to classify a video game company as strictly an entertainment company or strictly a software company, which can be incorrect.
Another point we discussed was the fact that the most basic coverage for most small companies, a general liability policy, may have important gaps for a video game company, which need to be filled with other types of coverage. For example, an errors and omissions policy can provide coverage for claims that a game company has violated someone else’s copyright, trademark, or trade dress. Larger publishers, such as Microsoft, have begun to require that small or “indie” developers carry E&O coverage before they will sell those developers’ games on their platforms.
Employee issues and relevant insurance policies, such as workers’ compensation and employment practices liability policies, were also a subject covered at the conference. While employee issues are not unique to the video game industry, there are some specific areas that can be. For example, testing a game as the deadline for its completion approaches can lead to “crunch” periods involving long hours by many employees. Proper documentation and compensation can be necessary to protect the company against wage and hour claims, and insurance can provide additional protections. In addition, the structure of the industry means that many small businesses and individuals might work with one another in a variety of ways, providing for interesting questions involving employment relationships that can impact potential liability.
Finally, we covered the privacy concerns many companies in the video game industry have, and the potential for coverage under CGL policies and newer privacy or “cyber” policies.
We concluded by encouraging companies to find the right fit when it comes to insurance coverage. Even within the same industry, one size does not fit all, and the wording of the same type of insurance policy can differ. Getting coverage tailored to your specific company’s needs is important to maximize the impact of the premium dollars spent.
In addition, it is important to contact a broker or counsel if an event occurs that might give rise to coverage, in the event that quick notice to the insurer is needed.
We also encouraged attendees to consider their insurance coverage in the event of a loss, as insurance can be an important but overlooked asset in protecting a company of any size. Even where the insurer denies coverage, the company should not necessarily take the denial at face value, because insurers can be and have been incorrect in concluding that coverage does not exist under a particular policy for a particular loss, and it can often be useful to obtain a second opinion from experienced coverage counsel.