To protect yourself and your business, getting adequate insurance cover is vital. Employers have a legal obligation to provide certain types of insurance, each specific type dependent upon the nature of the work involved. Items cannot be insured retrospectively and so any damage or loss incurred to items that are not insured cannot form part of any insurance claim. Making a decision about insurance is often a question of weighing up issues of cost and relative risk.
Calculating the value of items to be insured
As a general rule, items should not be insured for more than their actual worth as the insurance premium is based on the price given to the broker, with the level of risk and any previous claims made by the individual taken into account.
Tools, equipment and materials should be valued at their current replacement cost.
It is much harder to attach a cost to works of art as the items are irreplaceable. An established track record of selling work can be used as a basis for realistic valuation, but remember to keep up to date records. These should include:
- a photographic record of all sold and unsold work
- an inventory and receipts for all professional tools and unused materials
- copies of all correspondance with the insurance company
Choosing an insurer
All insurance companies should be authorised by the General Insurance Standards Council. Finding the correct policy to cover the work should be done in consultation with a broker. Never take out a policy without taking advice. The costs of insuring are variable and negotiable. Be prepared to shop around to find the best deal to suit you and your situation.
In order to obtain affordable insurance, be prepared to spend money on improving security. The more secure an item/venue is, generally, the lower the premium should be. Most brokers are happy to give a lower premium in exchange for a higher excess (the initial portion of any claim which the policy does not cover) so again, be prepared to do some research.
Types of Insurance
For individuals working in an arts environment, the type of insurance requried will heavily depend on the particular situation. Below I have covered some of the main types of insurance that you will need to look in to, depending upon your personal circumstances:
Liability Insurance
As a business owner and/or employer, you have a legal responsibility towards your employees, customers and the public. You could be held legally liable and risk being sued if an employee or a member of the public is injured as a result of your negligence or breach of duty. Liability insurance is designed to cover any compensation or legal costs that occur if the employer is found to be at fault.
How liability insurance works
The cost of insurance - known as the premium - is typically worked out using a book rating. A book rating is calculated using a base rate, which includes the insurer's costs and reflects their appetite for your particular type of business - if they want your type of business the rate will be less than if they don't. The premium is also calculated on the insurer's estimate of the level of risk attached to a particular business or industry area. The premium will be affected by factors such as your claims history, the size of the perceived risk and your approach to risk management. The safer your working environment and the fewer claims you have made, the cheaper your premium should be.
Public Liability Insurance
This insurance protects against claims for accidental bodily injury or damage to property of a third party, should the policy holder be found liable. Premiums depend on the type of business you run, your turnover and the number of employees you have.
It is required by self-employed artists to cover circumstances where there is chance that someone may be injured as a direct result of their professional activities, including all types of public performance and live events, workshops, residencies, open studios and public commissions.
There is no legal obligation to take out this type of insurance but if you are working in a public area without it, you may have to meet the legal and compensation costs of any claim brought against you.
For an individual, it may seem expensive but Public Liability Insurance (PLI) is important and should be built into the cost of your annual overheads. Many Local Education Authorities, galleries and organisations now do not, a matter of policy, employ artists who do not have PLI. If you are part of a studio group or organisation, it may be cheaper to get cover for the group as a whole. Some professional organisations and associations offer discounts on PLI policies. (SOURCE: Creative Learning Agency)
Employers' Liability Insurance
This covers claims against injury or death caused to employees in respect of working practices. If the employer is found to be negligent then the insurance enables the business to meet the cost of legal fees and compensation.
As an employer, there is a legal obligation to provide employers' liability insurance. If your business is not a limited company, and you are the only employee or you only employ close family members, you do not need compulsory employers' liability insurance. Since February 28th 2005, limited companies with only one employee, where than employee also owns 50% or more of the issued share capital in the company, have also been exempt from compulsory EL insurance.
The Government's Health and Safety Executive can levy large fines for every day an employer does not provide suitable cover.
Employers also have a legal requirement to ensure that all motor vehicles used by the company have the correct insurance.
Professional Indemnity Insurance
This insurance protects against claims for professional negligence to a third party should the policy holder be found liable.
A third party can make a claim against an individual/company for bad advice or designs paid for by the third party. Even printing an incorrect telephone number in a third party's advertising could be construed as professional negligence if it leads to potential loss of earnings.
Public art commissions will usually require public indemnity insurance for the artist. Expert advice should be sought if the individual is unsure of their position.
Arts consultants and arts businesses should consider professional indemnity insurance.
Building and Contents Insurance
Building insurance covers the fabric of the building in case of structural damage. The policy usually covers the rebuilding cost. Contents insurance will cover your possessions whilst they are within the boundaries of the building.
Musical instruments can sometimes be included in home contents insurance if the item is specified and cover provided whilst the item is out of the home.
The same type of 'all risks' policy can also cover specialist tools required for installation.
If you work from home, anything that you use professionally should be insured separately from your general home contents policy. There are specialised working from home policy packages that will provide specialist cover and will not invalidate your other policies.
If you are working in a venue, you should check whether or not the venue's insurance covers additional tools, equipment, costumes or props brought in for the exhibition/rehearsal/event.
Contents insurance can be difficult to find for rented workspace in a group studio building where there are a number of key holders. You may only be able to obtain insurance cover if you construct a secure storage facility within the studio for valuable items.
It may be necessary to enquire as to whether you may need to name particularly valuable items specifically.
Insurance has also moved into the online arena and it is very easy to organise your insurance policies online.
Talking to a financial adviser may be helpful. Most income protection insurers publish a wide range of information on their products, but all are required to issue a 'Key Features Document' to help you make comparisons between policies. Before you decide to take out a policy, your financial adviser or insurance company will give you information about the policy you are considering. This will give you important details about the policy you are considering and what the policy covers. This information can help you compare different companies' policies. Your financial adviser or insurance company will be able to answer any questions you have.
For all questions, visit the Association of British Insurers website. www.abi.org.uk
Health Insurance
Health and Personal Injury Insurance can be very expensive but may be necessary to cover loss of earnings of a self-employed practitioner (for example, musician or dancer) who, if injured, would be unable to claim sick pay.
You are unable to claim for pre-existing medical conditions, so, for example, a musician with noise-induced hearing problems would find it difficult to claim for reduced hearing over time.
WHAT IS INCOME PROTECTION INSURANCE?
It is a policy designed to give you a regular tax-free benefit if you are injured or too ill to work, resulting in a loss of earnings. There are three main types of product available:
- Those designed to replace a proportion of your lost earnings;
- Those which cover some of your living expenses – for example, your mortgage;
- Those which provide cover for housepersons.
Being too ill to work is likely to affect your earnings. What this effect may be, and how soon it will happen, will depend on your personal circumstances. Income protection insurance is designed to reduce the impact of this loss of earnings.
Under an income protection policy, you pay regular premiums to an insurance company and, in return, they agree that – subject to certain conditions – they will pay you a benefit if you are too ill to work.
At the heart of an income protection policy is the definition of incapacity. Which definition applies to you will be decided when you take out your policy. A number of different definitions of incapacity are used by insurance companies.
WHAT OTHER KINDS OF HEALTH PROTECTION PRODUCTS ARE THERE?
Insurers may combine different kinds of policy. However, the broader the cover, the greater the cost.
The main categories of product on offer can be split into long-term products, sold for more than one year at a time, and general insurance products, which are renewed annually. The different types are:
A. Long-term insurance products:
Critical illness insurance pays out a lump sum if you get any of the illnesses specified by your policy, provided you meet the definition of the illness in your policy and you have kept up your monthly premiums. You can use the lump sum or the income however you wish, for example, to pay off or maintain repayments on your mortgage.
- Private Medical Insurance
Private medical insurance is designed to cover the costs of private medical treatment for what are commonly known as acute conditions.
The insurance is designed to finance long-term nursing and other dependent care. A claim is payable if your health prevents you from caring for yourself.
B. General insurance products:
Accident, sickness and unemployment cover
Accident, sickness and unemployment insurance typically provides benefit for a limited period. A common form of this type of insurance is Mortgage Payment Protection Insurance which usually covers your mortgage payments for a maximum of 12 or 24 months in the case of accident, sickness or redundancy. There is usually a waiting period before payments are made of either 30 or 60 days.
You will need to decide which of these risks concern you, and then select the product(s) which meet your needs.
SOURCE: Association of British Insurers
Exhibition Insurance
Most exhibition venues have a works of art policy that provides insurance cover up to a certain agreed financial limit. Check that the total value of the exhibited works and the presentation equipment falls below this limit and that any high value items are individually specified.
Artists working with new media should check that the venue's insurance covers all the required presentation equipment as some policies specifically exclude electronic equipment (for example, DVD/video players, projectors, computer equipment, speakers etc).
To reduce costs, some venues exclude transport to and from the gallery in their policy (referred to as 'nail-to-nail' insurance) and, therefore, this may need to be arranged separately.
Tools used during an installation may also be excluded from the venue's policy.
Many policies provide 'all risks' insurance that covers works of art against fire, theft and accidental or malicious damage, including during transport. However, check the limitations of the insurance with your broker/venue as the policy may only cover theft if a work is stolen from a locked van or from the venue when it is closed and alarmed.
Check whether the exhibition venue has public liability insurance cover for the duration of the installation and the exhibition. If not, then the risks for third party injury must be assessed and you may need to arrange this cover yourself.
SOURCE: Arts Council England, Business Link
The following is a list of some insurers who offer public liability insurance for artists. Please note that I am not endorsing any of these companies and it is vital that you research your insurance company with care.
Gwennap Stevenson Brown Ltd
1 Tomlins Corner
Queen Street
Gillingham
Dorset SP8 4DJ
Tel: 01747 821188
Fax: 01747 821177
Contact: Pauline Gwennap
NFU Mutual
Livestock Centre
Matford Park Road
Exeter
Devon EX2 8FD
Tel: 01392 250455
Contact: Richard Pyle
SAA (The Society for all Artists)
PO Box 50
Newark
Notts NG23 5GY
Tel: 01949 844050
Fax: 01949 844051
Email: inspiration@saa.co.uk
Web: www.saa.co.uk
Contact: Linda Quelch, Membership Co-ordinator
T H March & Company Ltd
Hare Park House
Yelverton Business Park
Yelverton
Devon PL20 7LS
Tel: 01822 855555
Fax: 01822 855566
Email: insurance@thmarch.co.uk
Contact: M A Gerry
Some additional contacts are listed below:
Ian Wallace Insurance
info@craftinsurance.co.uk
http://www.craftinsurance.co.uk/
0800 919359
Philippa Levy Associates
LEAVYP177@aol.com
020 7790 1963
Squibbs
01278 421600
Insurance