Insurance is an important but often overlooked issue for artists. Generally, artists should contemplate insuring themselves for two main reasons.
“Insurance either protects you for your own kind of losses, or it protects you against claims by other people,” observes William Rattner, executive director of Chicago-based Lawyers for the Creative Arts. “In terms of their own losses, what artists have to understand is that (their artworks) are assets. They have value. (Artists also) ought to have some kind of a policy that protects against damage as well as vandalism and theft. They can’t just turn to the landlord and say, ‘That pipe burst.’ The landlord will say, ‘That’s right, I’m responsible for repairing the pipe. But I’m not responsible for what you have in your apartment.’”
General Liability Policies
Most of the time, renter’s, homeowner’s or condo owner’s insurance are for personal considerations, not commercial. Therefore, understanding whether or not your art is a hobby or a business is key to understanding whether or not you need any additional insurance policies for your art business. If it’s a hobby, then you may be covered. If it’s a business, then your current policy may exclude the kinds of coverage you need.
“I would advise that (an) artist contact the broker who handled their renter’s or homeowner’s policy and get their opinion,” says Emily Watts, program director for liability insurance at New York-based Fractured Atlas, a nonprofit resource for all types of artists. “Once the individual has that information, then they will know if they need to secure a separate policy. At a party I had recently in my apartment, if somebody had fallen down the stairs, a typical renter’s policy would cover that claim because it was not business-related.”
Manhattan painter Geujin Han brings both the perspective of the artist and his work as an account executive at one of the leading art insurance brokers in the country. At 40, Han is on the cusp of becoming a well-established artist, with his paintings selling in a range of $2,000 to $7,000. Like all art insurance experts, Han advises that artists take out a general liability policy, also known as a commercial liability policy.
“My landlord doesn’t require it, but I have it for myself because I know the liability is there,” Han says. “For example, if somebody comes in and visits me in my studio and they trip over a stretcher bar and fall down and hurt themselves, I’m liable for medical costs. Also, if I accidentally start a fire and the building is damaged, I would be liable.”
The cost of general liability insurance could be as low as $400 per year for a one-year general liability policy if the artist has a studio where interaction with the public takes place. It’s the “trip and fall” concern that is most important. That scenario changes for certain types of craftspersons who have equipment that could cause costly damage — a gas kiln, for example, that could lead to a costly explosion.
“Any decent commercial liability policy should have at least $1 million per occurrence limit and a $2 million aggregate limit,” says Watts. “This is the minimum that is typically accepted by venues, cities, etc. for permits, contracts and the like.”
In preparing to purchase a general liability policy, Watts says the first step is to make a complete list of everything an artist wants to insure. Each piece must be carefully described and ascribed a value. “Almost like an Excel spreadsheet,” she notes. Remember, though, “the actual general liability policy isn’t something anyone, an artist or otherwise, should concern themselves too much with as far as the details go. There are only a very few standard policy forms for a commercial liability policy and they are all basically the same.”
Protection for Art and Equipment
Watts stresses that general liability policies don’t cover everything. She explains that commercial liability and personal policies are written with exceptional clarity so that lines between the two are quite clear.
“A general liability policy will make payments for actual damages (repair work, medical costs), (and) will also pay for legal fees if there is a lawsuit involving those claims. (However,) it’s not going to cover your materials, your employees or your volunteers. There are different policies for each of those things.”
For example, an artist’s own work is never covered by a general liability policy.
“To cover artwork, you need a specific, separate policy,” says Watts. “Acceptable methods of valuation for artwork vary with the different insurance companies, but some standards are appraised value and average selling price.”
Sandra Berlin, one of the top art insurance brokers in the country, says that the artist can usually get protection that has a component for coverage of an art collection and works in progress. She suggests that artists should keep their art in more than one location in order to spread the risk of theft or damage, especially if an artist is not yet ready to purchase insurance. If an artist collects work by other artists, the same policies and recommendations apply.
An additional separate cost, Watts says, is equipment insurance.
“Equipment insurance is pretty straightforward,” she says. “People should get a policy that covers the total value of their equipment. Typically these policies are written on a replacement cost basis, and that is ideal. That means that if you bought a piece of equipment 10 years ago and it is stolen today, then the insurance policy will pay the cost to replace it, not the current value of the equipment.”
When Working Outside Your Home
What if an artist’s studio is at a remote site, such as part of an artists’ coop?
“If an artist’s studio is at a remote site, they will need to have a separate policy to cover them there,” Watts explains. “In that situation, it would be important to find a policy that would cover their studio location as well as their home, if they had any business activity at home, and an equipment/materials policy that would cover the equipment, materials, etc. in the off-site location, in their home and in transit.”
When artists exhibit at places such as fairs, galleries and museums, a new form of insurance comes into play — inland marine insurance.
“Inland marine insurance contemplates everything in transit, anything that is being moved around,” says Berlin. “(It) is written on a full-year basis with the artist’s studio as the primary location,” notes Berlin.
At an art fair, the sponsoring organization doesn’t have any sort of legal obligation to carry insurance, but it’s generally considered best practice for a presenting organization to have an insurance policy in place, observes Watts. Even with that, she suggests “that the artist have his or her own insurance in place because it’s better to know what type of coverage you have and that it’s enough coverage.”
In dealing with galleries, Han and others argue that an artist should attempt to get a gallery to share as much of the insurance load as possible, even though the gallery usually has the upper hand because the artist is anxious to have her or his work shown.
“Any time an artist loans work to a gallery, I think it’s crucial that you have the gallery provide insurance for the transport to the gallery and back, and while at the gallery,” notes Han. “That is another way to establish your value. Although you trust the gallery, you want to have things in writing to protect yourself.”
As for museums,Watts says, “Museums are often very good at getting the proper insurance. However, it probably covers the piece while it’s in the museum and not in transit, though that is not always the case. No matter what, I would still recommend that the artist have coverage for the artwork itself as well as general liability, just in case something happens at the exhibit and a patron’s lawyers try to sue everybody involved.”
Finding the Policies You Need
Watts advised that artists interested in insurance policies like those discussed here should make sure that the insurance company she or he purchases a policy from is admitted in their state and is rated A or better. “I personally recommend only using insurance companies that are A-plus or better, but there are actually some good ones out there rated A due to their small volume,” Watts observes.
The Artists Equity Association and The International Sculpture Center are two national membership organizations based in Washington, D.C. that offer all-risk arts insurance to fine artists and sculptors, respectively. Both offer coverage for works of art while in transit domestically and when on temporary location.
Additionally, the following companies offer specific artist policies: AXA Art Insurance, W.R. Berkley Corp., Chubb Group of Insurance Cos., Lloyd’s of London, StarNet Insurance, Traveler’s Insurance Co. and XL Specialty. The Artists Equity Association and The International Sculptor Center are two national organizations based in Washington, D.C. that offer all-risk fine arts insurance programs.
Regardless of which company you go with, it’s important that you feel protected, so that if the work you’ve made and career you built face a challenging situation such as theft or damage, you’ll be covered. AC