Tuesday, May 26, 2009
Protecting The Bottom Line
Considering the costs of the equipment you rely upon to make a living as a photographer, understanding how to insure that gear is of paramount importance
More Risks Than Realized
In a sense, photographers are no different than many other types of businesses when it comes to risks and insuring them. According to Danny Saunders, an insurance agent with Setnor Byer in Fort Lauderdale, Fla., photographers generally have many of the same common exposures that most businesses have. Just like any other business, it makes sense to carry general commercial liability (GCL) insurance. This sort of insurance covers bodily injury and property damage that the photographer, or his employees, cause while working, or which models or customers may sustain while in the photographer’s studio.
For photographers with employees, odds are that you also need workers’ compensation insurance. Commonly referred to as “workers’ comp,” this sort of coverage is required in nearly every state within the United States (while this coverage is elective in a few states, failure to have workers’ comp coverage can open the employer to claims that otherwise would be limited), and various other countries also have similar systems in place. Workers’ comp is intended to provide medical care to employees who are injured in the course of their employment and compensation for permanent injuries; however, the primarily goal of the coverage is to get the employee back to work.
New York, New York-based photographer Jack Reznicki learned firsthand the importance of having workers’ comp insurance. When an equipment case was accidentally dropped on his assistant, Reznicki sent the assistant to the hospital for stitches and to ensure that the assistant didn’t have a concussion. According to Reznicki, “In [New York], if you go to a hospital and say you got injured on the job, [workers’ comp] takes over immediately. And when they come to you later, you better darn well have [workers’ comp] coverage.”
Determining whether you need workers’ comp coverage for contractors is a more difficult task. Nearly every state has its own workers’ comp laws, and while some states only require that full-time employees be covered, other states extend workers’ comp coverage to independent contractors. Your local insurance agent should be familiar with local workers’ comp laws to help you decide whether the coverage is needed. However, if you rely upon independent contractors in other states, you need to let the agent know what states may be involved so that the agent may properly evaluate the risk and coverage needed.
Beyond the more common business risks, Saunders’ experience suggests that photographers have other, unique risks that must also be considered.
Equipment coverage is the most obvious. In order to provide coverage for damage or loss to equipment while on assignment or on location, equipment generally must be covered by a “commercial articles floater” or “inland marine policy.” Some companies have attempted to simplify the identification of such policies by referring to them as commercial camera policies. These policies cover the equipment off-site—away from the primary business location—and many, but not all, are all-risk policies (all-risk policies generally extend coverage to any loss or damage to the equipment, and not just loss through theft, fire, etc.). Similar to my own experiences, Saunders has seen instances where insurance companies attempt to limit the policies with various exclusions, such as precluding coverage for equipment stolen on location unless it was stolen from a locked vehicle and there’s sign of forced entry. Thus, it’s imperative that you read the exclusions when you receive your policy.
Saunders suggests that photographers doing location work also consider automobile coverage. Even if the photographer’s company isn’t supplying its employees with automobiles, if there’s a possibility that those actively involved in the business will be driving to or from locations for work, the photographer’s company still could find itself embroiled in a lawsuit and even responsible for damages caused by one of its employees.
Another key type of insurance that should be considered is professional liability insurance, more commonly known as errors and omissions (E&O) insurance. These policies pay against claims resulting from errors or omissions in the work that you did or failed to do. When tailored for pro photographers, these policies can provide coverage for claims resulting from equipment failures, memory-card corruption and even finicky, impossible-to-satisfy clients. In addition to providing indemnification for the actual costs involved with the claim (e.g., paying a judgment that results from the claim, paying a settlement to resolve the claim, etc.), the insurance also covers the defense costs (more about this later). As our society becomes increasingly litigious, and more and more frivolous law-suits are filed, the need for defense coverage often can prove to be more valuable than the indemnification against claims.
Reznicki also carries overhead insurance. As Reznicki describes, “With a big studio and large overhead, I carry a policy so that if something happens to me that affects my ability to work, my overhead is taken care of, after a period of time.”