What is a Film Completion Bond?

Simply put, a completion bond insures that the film will get produced or money will be returned to the investor. When a bank or financier invests money in an independent film production, they naturally want a guaranty that the film will be produced within a certain budget and time-frame. The bond company guarantees:

1. The film production team will make a movie according to the screenplay, within the strike price and on time.
2. Or, if the team isn’t complying with the contract, the bond company will take over the production and finish the film.
3. Or, if production is completely falling apart, the bond company will repay the financiers.

Before giving money to a production company, many investors or banks require a bond company to insure the production according to agreed-upon conditions.  The guarantor (bond company) examines several things to determine the risk of taking on liability for a production.  These factors include the screenplay, the experience of the producers involved, the director’s track record and the acting talent attached.  The guarantor usually requires consistent communication during the course of production regarding personnel hours, wages and production equipment.  To collateralize the production, the bond company usually charges between 3 and 10 percent of the production budget as remuneration. Some bond companies charge a fee up front which they partially refund (a “no claims rebate”) if no claims are collected.