Arts Insurance 101

The Basics for Small and Mid-Sized Dance Companies

By Bob Middleton

Just as death and taxes are inevitable, so is the need for insurance at some point in the life of a performing arts organization. Usually, this comes in the form of either a general liability or workers’ compensation policy, which is required for a contract or to fulfill state requirements when having paid employees. Either way, both types of policies are building blocks for an adequate insurance program for performing arts organizations of all sizes.

Even though larger organizations may have more exposures and assets to protect, smaller and younger companies may have more on the line when obtaining the best coverage for the lowest premium. The cost is a larger part of their total budget and a mistake could be devastating due to an uncovered claim or unforeseen expense. So let’s look at the policies, why you need them and how to best obtain them.

General liability policies provide protection against claims against bodily injury or property damage due to your negligence. This could be as mundane as a shoe flying from the stage and striking someone in the audience or scraping the floor of the studio you rent for a rehearsal. Limits are usually $1,000,000 per occurrence and $2,000,000 in aggregate for the term of the policy. They can be rated on square footage, payroll or tickets sold, depending on the insurance carrier. Premiums for a small company could be as low as $300 for a year, but usually they are less than $1,000. Many insurance carriers do not audit their policies, so the premium proposed will be the premium an organization will pay for the year. This is also the policy that generates certificates, which are required for studio rentals, theaters usage and all other groups that have an interest in making sure you have coverage in place.

One of the most important aspects of this coverage is to make sure that your operations and performances are insured, no matter where they occurs. Some policies require you to schedule all the locations and dates of performances, which is not only an administrative nightmare, but opens you up for a possible uninsured event. You may also obtain coverage for the rental of trucks and autos, which can be provided at a substantially lower cost than from the auto rental company. This non-owned and hired liability and physical damage insurance is usually added to the general liability policy.

Workers’ compensation coverage is the most difficult policy for dance companies and is usually the most expensive. Most states require an organization to obtain this policy when it hires employees, either paid by W2 or 1099. Each state has its own requirements and ratings basis for this coverage, but in all cases the premium is generated based on payroll. Few insurance carriers are interested in providing workers’ compensation coverage for dance companies, as they either do not understand the exposure or perceive it as unprofitable. Rates can range from $2 per hundred in some states and as high as $20 per hundred in California. Usually a company with less than $250,000 in payroll or without any claims experience will have to work through the state’s “assigned risk plan,” which is set up to insure those companies that cannot obtain coverage in the standard market. Sadly, organizations that pay hundreds of thousands of dollars are forced into these markets, as there are no other insurers that will work with them.

Equipment floater and inland marine policies will insure your costumes, sets, props and equipment from damage or theft. They also can insure your loss of business income in the case of the cancellation of your performances or damage to your facilities. This coverage should always be broad enough to provide coverage to your property at any locations without restriction, as in many cases you might be moving these items around.

As we have only scratched the surface of insurance policies for the performing arts, it is most important that you work with a reputable agent who understands the arts industry and the exposures that are specific to dance organizations. If the agent does not have any performing arts companies as clients, I would recommend talking to your colleagues in Dance/USA who have companies of similar size and asking them who they use as an agent. Many agents who do not work in your industry, not only would be unaware of the specific policies needed, but also might not even represent the appropriate insurance carriers that provide the best coverage and pricing for your organization’s needs.

Finally, always ask questions. You don’t want to finally understand your policy after you have a claim. Then it’s too late.

Five Must-Ask Questions for Dance Companies Looking for Insurance

1. How many performing artists do you currently insure?
2. Are there any restrictions on locations I can perform and be insured?
3. Are my equipment, costumes and sets insured without depreciation and are there any limitations on where they are covered?
4. Is my general liability coverage auditable? What is it based on?
5. Do I need workers’ compensation coverage?

Arts Insurance Program is a proud supporter of Dance/USA.

Bob Middleton is the owner/director of the Arts Insurance Program, which is affiliated with Maury Donnelly and Parr, Inc. The Arts Insurance Program is the largest insurer of dance and ballet companies and works with more than 5,000 performing artists nationally. Bob is a frequent guest speaker on insurance issues for the performing arts community and has been an agent for more than 30 years. He received a BA from the College of William and Mary and attended the USF&G School of Insurance. Bob was recently listed by Insurance Business America as one of the top 100 brokers nationally for 2016. He lives with his wife, three kids and two dogs in Baltimore. He does not golf.