Insurers factored in Salman Khan's likely arrest; denied non-appearance cover for his shoots

MUMBAI: Insurance is the art of factoring in the probability of an event and then taking a call on it.

And, when it comes to actor Salman Khan — he was convicted and sentenced to five years rigorous imprisonment in a 2002 hit-and-run case on Wednesday — the industry seems to have stayed ahead of Bollywood.

The judiciary may have taken 13 long years to come up with its verdict on Khan, but insurers had factored in his possible arrest while insuring his movies. In fact, insurance companies had denied non-appearance cover for the actor in case he didn't turn up for his shoots.

Analysts reckon that Rs 200 crore is riding on his unfinished films, Dabangg 3 and Prem Ratan Dhan Payo. Insurers also said that they would not honour third-party claims since Salman was driving without a licence and was under the influence of alcohol when his car rammed into a Bandra bakery, killing one and injuring four.

Insurance policies do not pay third-party motor claims when the person who is driving is under the influence of alcohol. "Salman Khan was driving without a licence and insurance policies do not kick in such a case," said a senior executive of a general insurance company.

Two of his films which are nearing completion — Kabir Khan’s Bajrangi Bhaijaan and Suraj Barjatya’s Prem Ratan Dhan Payo — would be the worst affected, but would not raise any claims.

"Insurance companies would not insure actors accused in criminal acts," said Sanjay Datta, head of insurance ICICI Lombard.

Insurance companies charge a premium of up to 3-5% of the sum assured, which depends on the Budget of the film.

Production houses, which are trying to bring in professionalism into the film industry, have started buying insurance cover for their ventures. So, in case of a cancellation or postponement, an insurance company reimburses the losses.

"Other than traditional event cancellation cover, insurance companies insure losses arising out of trouble in movie release in certain cities," said the executive.
"This cover was introduced in Fanaa, which could not be released in Gujarat," said the executive.