Every film production must have production insurance unless you own all of your own equipment and locations, work with nonunion cast and crew, and you are wealthy enough to afford any insurance claims against your production. And if you are that wealthy (because insurance claims on a film production can be very high) then you should have no problem paying for the production insurance. Consider it an expense that you must make.
I know from experience that even the most well-intentioned film crew can cause damage to locations or vehicles that can result in thousands of dollars of repairs. I shot in one location for a fee of $1k for 10 days. It was an incredible deal. We were extremely careful during the shoot. We put down the proper floor coverings, moved furniture carefully when necessary, etc. But, in the end, the production had an insurance claim filed against it for $10k in repairs. Needless to say this location's owner was very particular (a bit OCD even), but we had to pay it. Our deductible was $3k. So in the end, the location cost us $4k, which was still a great deal for a beautiful home in Marina Del Rey. And I shudder to think of the expense of paying for any medical bills due to injuries resulting from your set. All it takes is someone tripping over a piece of equipment on your set for a major medical insurance claim to be filed against your production. I worked on a major film production that had a freak accident in which a transpo driver was bouncing a golf ball on the sidewalk. The ball hit a crack and flew off to hit a woman in the face. A medical claim was filed and the production had to cover all her dental expenses.
Production insurance does come with a hefty price tag. It can fluctuate due to what kind and how much coverage you need.
Typical production insurance policies can include General Liability, Third Party Property Damage, Equipment, Props, Sets, and Wardrobe, Vehicle, Cast, Negative Film or Videotape, and Workers Compensation insurance and more. For a $1 million film, it can hover around $20k for a year for a relatively complete policy. For a micro-budget film, you are lucky to get a plan that comes in around $5k -- and that is usually a short-term production plan for two to three months at the most, just enough time to get you through a short pre-production and production. From there, you can try to purchase another short term policy to cover any post-production needs. I have even purchased low-cost equipment insurance (a few hundred dollars) in order to rent equipment, like tape decks for transfers, during post production, etc.
I usually purchase production insurance once the film production is ready to start hiring cast and crew and needs to lock in equipment, typically at the start of pre-production. Camera houses and grip and electric vendors won't even allow their equipment off their property without being added to the production's insurance policy with the General Liability set at a certain level. When considering your policy, call the vendors and ask what insurance they require and how much their equipment is worth. This will give you an idea of how much General Liability and equipment insurance you will need. And be sure to check in with the insurance provider on what their policy covers. Most will not cover your personally owned vehicles or locations. And yes, I have story about how a producer (not me) used her own home for the location. The hot lights set off her sprinkler system in her building. She faced $30k in repairs and no insurance coverage since the policy wouldn't cover personally owned locations.
Hopefully, your production will sail through with no insurance claims. But if you get one, at least you will have help covering the bill.