Business of Art | Business Insurance for Artists 101
How to proactively protect yourself, your art, and your practice.
When it comes to protecting yourself and your art, being proactive is key. Don’t wait for problems to arise to start shopping for insurance. Yes, this is an extra expense, but one that you should always budget for.
Keep in mind, though, that not all insurance is the right one for you. Making an educated decision when purchasing insurance is the best way to make sure you will be covered in the case of an emergency. A good rule of thumb is to remember that your practice is a business (even if your studio is inside your home), which means that your regular coverage might not apply. Even worse, running a practice from your home might jeopardize your homeowner’s or renter’s coverage. Insurance companies might argue that your studio space is, in fact, a business, and refuse coverage over anything related to that space—including materials and equipment, which would be considered business expenses.
Things get even more complicated if you’re seeking coverage for your artwork. A previous blog post by Toccara Thomas explains the hurdles that artists had to face in the aftermath of Hurricane Sandy:
And, there was downright hurt when many artists also discovered that 1.) Their artwork was covered only if they could produce receipts expressing the market value of their work, 2.) The artist’s assessment of the value of their art was not covered because of lack of receipts, but they could recoup equipment and material costs (minus depreciation) if they had receipts, or 3.) Their artwork was completely not covered and that without the needed funds, there would be no way to cover restoration work on damaged pieces.–Toccara Thomas
Sounds like a nightmare scenario, right? But it doesn’t have to be, as long as you make sure you’re covered under the correct insurance policy and you keep your inventory of artwork, equipment, and materials thoroughly organized.
Insurance Options to Consider
By now you should be convinced that if you’re making money from your art (even if informally), you should probably have a business insurance policy. From an insurance company’s perspective, you become a business the minute you start selling your art. Once this line has been crossed, you’ll also want to consider additional insurance packages to ensure that you’re properly covered. The list below is by no means exhaustive, but a good starting point before you reach out to a broker or continue your own research.
Business Liability Insurance
Did you know you can be held financially liable for any issues that might arise from someone having contact with your work? That goes from visitors at your studio space to workers or volunteers assisting with production. Accidents happen and the best way to make sure they don’t break the bank is to make sure you have liability insurance coverage. There are several types of liability insurance, and we recommend that you do your research and check which ones apply to your practice.
Commercial Property Insurance
This policy will protect not only your physical work space (whether you own it or rent it, whether it’s in your home or a dedicated studio), but also the equipment and inventory within. Be mindful that this type of insurance might not cover damage from natural disasters.
Flood and Earthquake Insurance
These natural disasters have their own category because they’re not covered under blanket insurance policies. They’re especially important for those that live in areas prone to such issues, but you don’t need to live in an earthquake or flood area to purchase them. Note: if your practice is located in a high-risk flood area, flood insurance might be mandatory.
Business Interruption Insurance
This coverage is especially important if a big part or all of your income is generated through your practice. As its name suggests, Business Interruption Insurance will cover your loss of income for a limited period of time should a disaster or other external forces keep you from accessing your workspace.
Inland Marine Insurance
If you’re applying for residencies or exhibitions, or even conducting sales, your artwork will be in transit at some point, and yes, there’s a special kind of coverage for that. This policy will cover your work while under virtually any means of transportation over air or land and while it is being temporarily warehoused. Need to transport your work over water instead? You guessed it, you’ll need another type of policy called Marine Insurance.
How to Shop for Insurance
Artists may have special coverage needs that differ from other regular businesses. Also, purchasing a business insurance policy as an individual will probably make it a lot more expensive. Our advice? First, consult a specialist or multiple specialists before making a decision. Talk to other artists and share information about their experiences with the brokers and/or companies you speak to when conducting your research. Second, join forces with other artists to bring the cost of your insurance policy down. Arts organizations and/or unions like American Craft Council, American Society of Media Photographers, and The Authors Guild often negotiate better policy rates and/or discounts when you become a member. Another thing to keep in mind, especially if you run your practice from your home, is to check with your broker if your homeowner’s or renter’s insurance doesn’t create a conflict with your business coverage—one should not void the other.
Purchasing insurance is only the first step towards protecting yourself. In order to actually benefit from your coverage in the case of an emergency, you must make sure all your receipts and documents are in order. Materials, workspace, and works of art should be documented with photographs, their value, and receipts—ideally all in one, easy-to-locate place. You should also make sure you have a backup of all these documents in another location.
Tracking your sales is key should you need to claim the value of lost or damaged art works. Insurance companies won’t process claims based on what you perceive to be the value of your work. Instead, they’ll require a proven market value, which might be based on how much your previous works have sold for. Other transactions for shipping and storage should also be properly documented.
This inventory work should begin even before you start shopping for insurance. Showing up prepared for a conversation with a broker is the best way to protect yourself against unnecessary upsells or unsuitable policies.
– Luiza Teixeira-Vesey, Designer/Marketing Officer
This article is an updated version of the “Business Insurance for Individual Artists” blog post. You can find more articles on arts career topics by visiting the Business of Art section of NYFA’s website.