Completion Bond
Insurance policy guaranteeing film delivery within budget and schedule, protecting investors from cost overruns.
Definition
A completion bond is a specialized insurance product that guarantees a film will be delivered on time and within the approved budget. The bond company assumes financial responsibility for any cost overruns beyond the budgeted amount.
If production exceeds budget or schedule, the completion bond company can take control of the production to ensure delivery. This protection mechanism is essential for securing financing from banks and institutional investors.
Why It Matters
Completion bonds are often mandatory for securing production financing, especially for independent films and international co-productions. Without this guarantee, banks and investors face unacceptable risks from potential budget overruns.
The bond provides credibility to production teams and enables access to larger financing pools. It also forces producers to maintain realistic budgets and schedules, improving overall project management discipline.
Examples in Practice
Major studio productions like Marvel films typically require completion bonds to protect their $200+ million investments and ensure delivery dates for coordinated marketing campaigns.
Independent films seeking bank loans must often secure completion bonds before accessing production financing, as banks require guarantee of deliverable product for collateral.
International co-productions use completion bonds to satisfy multiple territory financing requirements, ensuring all investor countries receive promised deliverables regardless of production challenges.