Insurance Essentials For Musicians PART II
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SECTIONS Common Exclusions From Entertainer Insurance Policies
Glossary of Common Insurance Terms for Musicians
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Glossary of Common Insurance Terms for Musicians [Part II]
What’s The Difference Between a Claim and a Lawsuit?
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Common Exclusions From Entertainer Insurance Policies OK, let’s address the elephant in the room. Insurance isn’t the coolest topic to discuss when it comes to your career. We get it. We’re sure you’re much more interested in articles on gear, recording techniques, business advice and so on. But, as a responsible musician, there comes a time when these matters must be addressed, and as we’ve pointed out before, it’s best to tackle insurance matters head on before the unthinkable occurs. And, as a responsible publication, we want to give you the resources you need to make informed decisions about your band’s business. Now’s the time to talk about coverage – specifically, what’s not covered by the typical entertainer’s insurance policy. It was one of the most frequently asked questions we received when we polled musicians about insurance, and one that we’d like to set the record straight on. As always, when it comes to such things, we urge you to consult professionals with any specific questions on buying coverage. For more information, you can visit our friends at K&K Insurance and remember, stay safe out there! WHY ARE THERE EXCLUSIONS IN THE FIRST PLACE? When you boil it down, insurance providers exist (in ultra-simplified terms) to provide you with peace of mind in case of accidents or socalled “acts of God.” We’ve covered what this means before, but an easy example to think of is damaging to a venue during load-in. Maybe you scrape the walls or floors with your road cases. In this case, it’s clearly an accident; no malice was intended. And even though that’s the case, the venue operators may be well within their rights to file a claim against you, as the responsible party. Now, that’s all well and good. You made a mistake, damage occurred, and hopefully you’ve got a good insurance policy to cover you against such damages. But, why would your provider exclude any acts from their policies?
It oftentimes comes down to risk. How risky are you? More specifically, how risky are your behavior or actions? Are you engaging in or encouraging acts on stage that could potentially be dangerous and cause bodily harm, property damage or both? Well, that’s going to be a non-starter when it comes to writing you a policy. Let’s look at some examples of notable exclusions. ANIMALS Something you may not think of, but if you bring your dog out to the gig, it may all be fun and games until someone gets hurt. Regardless of fault, if the animal in question is over a certain weight threshold, and not a part of your stage act, you may not be covered for injuries or property damage Spike has caused during the show. So, think twice about bringing pets out on the road, or speak with your insurance provider about your specific policy to see which types of animal exclusions are part of the deal. CROWD SURFING AND MOSH PITS Here’s one of the more applicable scenarios. Your entertainer’s insurance policy may exclude such behavior arising from your participation or encouragement of others to participate in activities that could be dangerous. Right? While crowd surfing looks like a lot of fun if you’re in a Pearl Jam video from 1991, it’s a very risky behavior. And as we know, your insurance provider wants their ideal clients to be as risk-averse as possible. Since injuries are likely to occur, it’s a no-go. Don’t be surprised if this is an exclusion from your coverage. Same for inciting and participating in mosh pits. It might be the epitome of rock n roll, but someone can get hurt if things get out of hand (heck, even if they don’t). And what have we learned? Say it with me - if you’re responsible for behavior that clearly has the potential to cause injury and/or damages, that could very well be an exclusion from your policy. Bottom line, don’t look
for a lot of sympathy from your insurance provider if you’re hit with a claim from someone who was hurt because of your risky actions or your instructions to others in the audience to act in a way that got the person hurt. Accidents are one thing. Those can happen to anyone. But the key difference when it comes to exclusions is the potential for injury or damage to occur because of actions you’ve taken. Loading in a bass amplifier is an action that typically doesn’t have the potential to end in injury or damage. Slam dancing, moshing, body surfing – these are the types of things your insurance provider will pull their hair out over. At the end of the day, we’re not going to tell you how to run your show. It’s your art. We just want you to have the information you need to make your decisions. That’s all. PAINTS AND FLYING OBJECTS We’ve seen a lot of fun shows over the years that involve creative body paints and audience participation. Just know that your insurance provider might have exceptions in their policies for any substances you’re applying to yourself or others that aren’t non-toxic or FDA approved. So, if someone develops an illness or reaction because of some cheap paints with who-knows-what ingredients,
that could potentially be all on you when you’re hit with a claim. And lastly, while it should go without saying, we’ll say it anyway just so everyone’s on the same page. If you toss objects into the crowd, even in a benign way (like t-shirts or other types of merchandise), and someone gets hurt or your whip a record into a ceiling fan and it breaks, you might have some explaining to do with your provider. In some instances, they might exclude coverage for actions you’ve engaged in where physical items are thrown at or into the audience. Think of that the next time a cheap t-shirt cannon pops up in your eBay feed. CONCLUSION You’ve heard us repeat it a million times, but to be sure, always check over your policy and ask your provider to answer any questions you may have. They have the answers, trust us. The best policy (no pun intended) is consult a professional whenever you’re in doubt. Stay safe out there and look for more tips in the months ahead. And in the meantime, check out https://www.kandkinsurance.com/sites/entertainer/pages/BandsPerformers.aspx – you may qualify to get a quote or even purchase insurance online.
photo by Rodrigo Bertolino
Glossary of Common Insurance Terms for Musicians
As a responsible performing artist, you’ve made sure that your tour dates are booked, travel and lodging are taken care of and that you’re fully insured for that big gig. Right? No? Well, we’ve written quite a bit on the importance of entertainer insurance in previous articles, so those are well worth your time if you plan on performing live in the future. Now one of the things we want to do is keep an updated glossary of terms relating to insurance that musicians should know. The goal here is to provide a free resource that explains, in common terminology, what certain things mean and how they apply to you. The first list of ten terms are presented below, with the goal of adding more on a regular basis to form a complete base of knowledge for your insurance education. Without further ado, here are some basic terms and phrases relating to insurance for live musicians.
ACTUAL CASH VALUE (ACV) If you come across this term or acronym, then something has likely happened to someone’s property, and someone’s liable. Actual cash value is just one method to figure out what an insurer will pay the insured for property or items that have been damaged. Usually this is figured out either by subtracting the deprecation of the property/object from its current replacement cost, or by assessing a reasonable fair market value to the property/object. In real world terms, if you carelessly damage the equipment of a venue, the venue may receive payment for the cost to repair that gear, or its replacement costs minus depreciation (they’re not going to get full new price for used, old stuff, in other words).
ADMITTED COMPANY This is an important one, and we’ll let our friends from K&K Insurance explain: “When choosing an insurance provider, always ask about the financial stability of the carrier; a high rating (A or better) by an independent rating company such as A.M. Best Company is the safest choice. Also, choosing a carrier that is “admitted” (licensed) is preferable because choosing an insurance company that is non-admitted (called surplus lines) may require you to pay extra fees or taxes.” -Lorena Hatfield, Marketing Resources Manager CLAIM Uh-oh. Something has happened. But this does not necessarily mean you’re getting sued because of actions you took, or even negligence. That’s one clear distinction we want to make, because there seems to be some confusion on the matter. Just because a claim is filed, does not mean you’re personally being sued. With lawyers. And courts. And judges. And sketch artists. I mean, unless you really did something heinous and you can’t come to an agreement during the claims phase… What it means, simply, is that the affected party (let’s keep using the example of the venue that’s had their gear or stage damaged by a band) has just made a request from an insurance provider to be compensated for their loss. They want to be made whole again, which is fair enough, and this is the first step in the process. It’s the reason you have insurance policies in the first place, so that you can have them deal with any claims that may arise, whether valid or frivolous. That’s what you’ve contracted with them to do (and why you pay them), so work with your insurance provider closely to deal with any claims that may arise. Hopefully you don’t ever have to see a courtroom. CLAIMANT To go with the above definition, the claimant in this case would simply be the venue, not the performer. There seems to be confusion as to who’s referred to as what, so there you have it. The person (or entity) requesting the compensation is making the claim, therefore they’re the claimant. Simple, no? DEDUCTIBLE This is another commonly misunderstood one, so let’s make it easy: here’s what you’ve got to kick in before insurance takes over. In other words, it’s the amount you’re responsible for before your provider starts covering your butt. But again, you’re gonna be super careful angels out on tour, right? ENDORSEMENT A lot of folks seem to think this means proof of insur-
ance, or that your insurance provider is “endorsing” you and covering you. No, what it really means is that an addition or amendment (sometimes called a rider) has been added to your policy that adjusts your coverage in some way. Keep in mind this may take precedence over your existing contract, so read and agree to all changes to your policy carefully. EXCLUSIONS Just like it sounds, these are things that your insurance provider WILL NOT COVER. So, make sure you understand what they are before you hit the stage. We did a whole write-up on common exclusions, so you’ve got no excuses! INDEMNIFICATION This is a big word that means something simple: it’s just relating to the compensation provided to the claimant for any losses incurred. Let’s use it in a sentence: when you indemnify another party for their loss, like an insurance company may have to do, you probably don’t like doing it. LIABILITY INSURANCE Here’s a key one, because this is really what we’re talking about when it comes to live performers. And it differs from car insurance, renter’s insurance, flood insurance and other types of insurance you may already have. Liability insurance specifically provides coverage when loss or damage occurs due to your actions or negligence, and this can typically mean bodily injury as well as property damage. You did (or failed to do) something; you’re now liable or responsible for it. LIMIT OF INDEMNITY Since you now know what indemnity means (see above), this one should now make a whole lot more sense. These are also known as liability limits, and as you may have guessed it’s the max amount your insurance provider is going to pay on a claim against you. So, if you do something beyond the scope of comprehension and cause untold millions in damages, you’ve likely gone WELL above your limits to the point where you’re gonna be on the hook for a lot of dough, far more than any insurance will ever pay out. But let’s hope that scenario never plays out, shall we? UNDERWRITER Sometimes the most misunderstood part of the process, an underwriter is the person who first determines whether you are even insurable (I’m looking at you, fire-jugglers!) and then (and perhaps most importantly), decides and analyzes the risk you pose to come up with your policy’s price, or premium. This is the person who ultimately determines your rates, as well as your coverage.
Glossary of Common Insurance Terms for Musicians [PART II] Welcome to our second round of insurance terms you, as a performing artist, should know! The goal here is to provide a free resource that explains, in common terminology, what certain things mean and how they apply to you and your needs as a musician. Many of the terms and phrases in the list were submitted by our readers (so thanks for sending in the suggestions!), with the goal of adding more on a regular basis to form a complete base of knowledge for your insurance education. Without further ado, here are some more basic terms and phrases relating to insurance for live musicians. ACTUARY Actuaries are professionals who play a big role in determining how your policy looks, based on pretty advanced math, factoring in all the risk factors associated with your act. Now, one of the biggest confusions lies in the difference between an actuary and an underwriter. So here goes: an underwriter, in basic terms, takes a look at your riskiness, and determines whether or not at that point to even offer a policy to you and what that policy would be. So, an underwriter may be pretty wary of giving the crew from Jackass a great policy because they perform incredibly dangerous stunts. Whereas a live entertainer, while still presenting some risk, is much less likely to inflict damage or bodily harm than Johnny Knoxville and his friends. An actuary is often a stat nut, using their math skills and risk assessment to come up with policies that will ultimately benefit the insurance companies they work for. Hey, we never said these were charities. Underwriters will scrutinize your application to make sure you can qualify, and the actuary is the person who actually helps make the policies and set premiums in the first place. ADJUSTER An adjuster, or sometimes called a claims adjuster, is the person who does the detective work when a claim is filed to find out what happened, and in the end make a determination of how much liability the insurance company has in the situation. So, in the unlikely event that your band trashes a venue, a series of phone calls and emails will prob-
ably be fired off in rapid succession, ending in an adjuster heading out to the scene to examine the damages. They’re going to document everything, take witness statements, and be the lead on figuring out just what happened, and how responsible you (and your insurance provider) are for everything. They may also work with hospital records in case of liability claims in the event that you injured someone during your set. REPLACEMENT COST There seems to be a little confusion here as well as to the difference between actual cash value, which we defined in our previous glossary entry, and “replacement cost.” So, let’s take a look at replacement cost to clear things up. The replacement cost is the real-world dollar amount it would take to replace damaged property (like something you trashed in the venue scenario above), but does not take into account depreciation. Again, the idea is to make you (the injured party or party who’s sustained damages) whole again, not so that you can benefit and be better off after a claim. So, in the venue’s case, they’d get what’s called “like materials” to fix or replace any damaged areas. If the floor was torn apart, for example, they can’t just go and expect to replace builder’s-grade flooring with top-of-the-line endangered rosewood imported from the Amazon. “Like kind and quality” are the key words here. So, to recap, there are two basic ways to establish the value of payouts from an insurance claim: ACV or actual cash value which does consider depreciation, and replacement cost coverage, which does not deduct for depreciation. ACT OF GOD This one seems to trip people up, as well, but the definition is simple. With most liability insurance, you probably will only ever talk to your agent when it’s time to renew, or if unfortunately, you are responsible for damages or injuries. In the latter, it’s important to note that claims against you must typically be as the direct result of your actions or negligence: meaning you are pretty much at fault for whatever ensued. You caused it somehow. There are things that would be outside of your control, however, like natural disasters or other events
that you could not have ever prevented no matter how careful or diligent you were in your behavior. In fact, we say that no amount of planning, safety measures or foresight could prevent these things from occurring, which typically means (if your policy is drafted right), you won’t be liable if a Category 5 hurricane rolls into town during your gig and destroys everything in sight. (Of course, this is an exaggeration, but you get the idea. You wouldn’t be on the hook). EFFECTIVE DATE Finally today, we want to cover a really important term in your policy. One that relates to when your policy actually kicks in! It seems pretty obvious, but your policy may include an “effective date,” meaning the actual day it becomes active. It could be the same as the day of signing, but it might not. Be very careful of this; just because you signed something today does not necessarily mean your coverage is instant. Make sure you go over this with your agent or insurance provider,
so you know exactly when your policy takes effect and your protection is actually being provided. The last thing we’d want is for you to hit the stage before your coverage period begins and then have to deal with a really unfortunate situation that could have been avoided. FOR MORE INFO… You’ve heard us repeat it a million times, but to be sure, always check over your policy and ask your provider to answer any questions you may have. The best policy (no pun intended) is consult a professional whenever you’re in doubt. Stay safe out there and look for more tips in the months ahead. And in the meantime, check out: https://www.kandkinsurance.com/sites/entertainer/pages/BandsPerformers.aspx -- you may qualify to get a quote or even purchase insurance online.
photo by Azchael
INSURANCE BASICS: What’s The Difference Between a Claim and a Lawsuit?
A few months back, we posed a question to our readership, asking if they had any entertainment insurance-related questions that they wanted answered in the pages of Performer. In our last two installments, we tried to break down a number of insurance terms with examples that any musician could understand. In this installment, we’re tackling a very specific question we received enough times to warrant its own response: what exactly is the difference between an insurance claim and a lawsuit? In both cases, someone’s “claiming” I’m responsible for damages and they want restitution, right? Well, let’s take a look at the basic definitions of each, how they differ, and how they apply to live musicians. WHAT’S A CLAIM? The best place to start is to define “claim” when it comes to the world of entertainment insurance. A claim is basically a request. That’s all, just think of it as someone asking the insurer for payment to make them whole again after a loss. Now, that loss could be property damage, injury, what have you. But a claim is made and then processed by the insurance provider based upon whether they feel the policy they provided covers the actual inciting event. Now, that’s an oversimplification, and processing claims is an entirely different matter (whether the claim gets paid or not may take some time and effort on both sides), but right now we’re just interested in what the claim actually is. WHAT’S A LAWSUIT? Here’s where things get more complicated and can escalate to the next level. Let’s say the party who suffered the loss wants to be compensated for their damages. OK, fair enough. A claim is probably filed. Simple, right? That gets processed by the insurance provider in question (let’s go back to the simple example of you, the artist, being the insured party who caused property damage to a club on stage, and your insurance company is the one providing you with a policy with certain coverage options). Now, for the sake of argument, let’s say the wronged party (the club’s owner) and the insurance company cannot come to an agreement. They cannot settle the claim, as it were. That’s not good. That’s when courts and lawyers may get involved, and a lawsuit may ensue. Put simply, a lawsuit arises when the two parties aren’t able to come to an amicable agreement on their own. The ideal result, usually, is to have the claim settled before it reaches that point. As a musician, you don’t want to get dragged into a legal battle in front of a judge when you’d rather be spending time on your career. That’s why you opted for insurance in the first place.
FIRST THINGS FIRST So, let’s get the order of things straight. First, let’s assume some form of damage occurs. Maybe you injure a fan due to reckless on-stage behavior, or maybe you bust up the floorboards of the stage. Doesn’t matter. Either way, a claim is going to be filed. That’s the first step. Next, you’d hope that the club owner and your insurance provider can settle that claim, and everyone can move on with their lives and put this in the rearview mirror. If that doesn’t happen, you might be facing phase two: lawsuit time. KEY DIFFERENCES AND RISKS INVOLVED The key difference here is that claims don’t involve judges, juries, courthouses, or anything like that. A judge isn’t presiding over any of the proceedings, juries aren’t making any decisions as to the merits of the case, or guilt and innocence, and typically you’re not dealing with attorneys building cases against you in open court. It would need to get pretty bad, in most cases, to get to a courtroom trial. They carry a lot of risk, a lot of headaches and a LOT of expenses. Hourly rates for lawyers add up quickly, so if you’re in the defendant’s seat, you must have done something REALLY wrong for the club owner to shell out all those fees to see you in court. The risk here is that a lawsuit can get thrown out, and there’s still legal fees to pay on both sides. Claims don’t come with the same risks attached. There’s no real risk in filing a claim. It might get rejected and not get paid, but those are the breaks. In certain instances, if the club owner decides to file a lawsuit against you and LOSES, then they may be responsible for certain legal fees you’ve incurred as part of the process. That doesn’t exist in the claims phase, so bringing about a lawsuit carries serious financial risks that must be taken into account. There’s also the risk that higher courts could overturn rulings on appeal. And the risks to reputations when lawsuits are filed, and so on…the point is that lawsuits come with their own baggage that claims do not. Which is why, in a lot of cases, it’s beneficial for everyone to try their best to address and settle claims and not let things escalate if they don’t need to. But, you’re not going to do anything that would bring about damages in the first place. Right?