The cost of business insurance is not prohibitive; however, replacing your studio and not being able to work are. CERF+ has seen too many businesses unable to bounce back after an uninsured emergency. Remind yourself that having good coverage is one of the costs of doing business and part of your responsibility to yourself, your business and others who depend on you. The rates for coverage will vary depending on where you live and which underwriter you work with. A basic business owner’s policy will cost between $400-$1,000 annually. Of course, every business is unique and yours may require special coverage, which can raise the overall cost.
Things to Watch Out For
- Proper protection — Don’t be under-insured. If you can’t afford complete coverage, purchasing some insurance is better than having none. Do avoid unnecessary coverage.
- If you rent — Too often we hear from artists who didn’t have business insurance because they thought they’d be covered under their landlord’s policy. WRONG! The landlord’s building is covered under his/her policy, but not your equipment, tools and inventory.
- In-home studios — Homeowners policies provide little (typically $2,500 for business equipment) or no coverage for business related assets. You may be able to add endorsements to your homeowners policy, but for adequate coverage most in-home art businesses need a separate business insurance policy.
- Gaps in coverage — Make sure you understand the scope of your coverage. If there are known gaps due to cost, understand what they are and make an alternate plan.
- High deductibles — Be careful not to be tempted into purchasing a policy with a high deductible in an attempt to keep costs low. Can you really afford to pay a $10,000 deductible if something occurs? Financial Investment
- Exclusions — Know what they are and don’t be afraid to ask questions!
- Quotes — Shop around and get at least three quotes; rates vary widely.
- Stability of the insurance carrier — It’s a good idea to check the financial stability of the insurance company before signing up for the policy. Independent agencies, such as A. M. Best and Standard & Poor’s provide free basic rating reports on insurance companies as well as complete reports at a cost. There is more information on these rating services in Resources.
- Good corporate citizen – Is your current or potential insurance carrier a good company to work with, or even licensed in your state? United Policyholders, FBIC and your state insurance commission’s office can help answer these questions. Details found in Resources.
- Claims — Ask your insurance representative if any claims have been made on the type of insurance they’re offering and what turn-around time you would expect in the event of a claim. If no claims have been made or you feel service is unreasonable, choose a different company with which to work.