“Fast And Furious 7” and why Key Person Insurance can be Critical

This week, the Hollywood Reporter posted this article about if, and how, the film studio Universal will handle completion of "Fast and Furious 7" in the wake of actor Paul Walker's death. Although a significant portion of the movie has already been filmed, apparently most of the action sequences still remain to be lensed. Universal has indicated that it wants to move forward with the movie (after doing some rewrites to respectfully address Mr. Walker's death), but that decision may not be up to the studio.

According to the Hollywood Reporter, the destiny of "Fast 7" may actually be decided by . . . an insurance company?

It's common practice in the film industry to insure a movie's production against accidents. This includes insuring the lives and physical health of actors in key roles. Because of Mr. Walker's death, an insurance company may have final say in whether "Fast 7" goes forward because much of the financial risk, and cost of filming reshoots or rewrites, would be borne by the carrier. The company will have to decide whether the cost of completing the movie (which would allow the carrier to recoup some of its money upon release) will be worth the investment versus shutting down production and writing off the cost of the insurance payment made to Universal. Speculation has it that the insurance carrier will opt to proceed with production on the film, but that decision still remains to be made.

Any fan of the films knows that the impact that Mr. Walker's death had on "Fast 7" cannot be understated. His character, Brian, was central to the "Fast and Furious" franchise. Mr. Walker's absence from future films will be felt by the film's fans, as he cannot easily be replaced.

Of course, many different businesses in a variety of industries rely on key people — without whom the business would not function smoothly. Indeed, sometimes a key person is so important to her or his company that the loss of that person would be devastating. The same is true of some franchise companies.

Some franchisors are heavily influenced by a small group of individuals, typically the business's founders. These people and their dynamic personalities are what drive the brand strength and have created the majority of the company's goodwill. If one of these key people is lost, it could have a severe, perhaps even ruinous, financial impact on the company.

This is the type of risk that "key person" insurance (sometimes called "key man" insurance) is designed to protect against. If you are a franchisor that is heavily dependent upon the continuation of one or more key individuals, you may want to talk to your insurer about obtaining this type of coverage.

My sympathy to the friends, family, and fans of Mr. Walker. I appreciate his contributions to an enormously entertaining film franchise.

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