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Welcome to our second round of insurance terms you, as a performing artist, should know! In case you missed Part 1, you can catch that here.
The goal here is to provide a free resource that explains, in common terminology, what certain things mean and how they apply to you and your needs as a musician. Many of the terms and phrases in the list were submitted by our readers (so thanks for sending in the suggestions!), with the goal of adding more on a regular basis to form a complete base of knowledge for your insurance education. Without further ado, here are some more basic terms and phrases relating to insurance for live musicians.
Actuaries are professionals who play a big role in determining how your policy looks, based on pretty advanced math, factoring in all the risk factors associated with your act. Now, one of the biggest confusions lies in the difference between an actuary and an underwriter. So here goes: an underwriter, in basic terms, takes a look at your riskiness, and determines whether or not at that point to even offer a policy to you and what that policy would be. So, an underwriter may be pretty wary of giving the crew from Jackass a great policy because they perform incredibly dangerous stunts. Whereas a live entertainer, while still presenting some risk, is much less likely to inflict damage or bodily harm than Johnny Knoxville and his friends.
An actuary is often a stat nut, using their math skills and risk assessment to come up with policies that will ultimately benefit the insurance companies they work for. Hey, we never said these were charities. Underwriters will scrutinize your application to make sure you can qualify, and the actuary is the person who actually helps make the policies and set premiums in the first place.
An adjuster, or sometimes called a claims adjuster, is the person who does the detective work when a claim is filed to find out what happened, and in the end make a determination of how much liability the insurance company has in the situation.
So, in the unlikely event that your band trashes a venue, a series of phone calls and emails will probably be fired off in rapid succession, ending in an adjuster heading out to the scene to examine the damages. They’re going to document everything, take witness statements, and be the lead on figuring out just what happened, and how responsible you (and your insurance provider) are for everything. They may also work with hospital records in case of liability claims in the event that you injured someone during your set.
There seems to be a little confusion here as well as to the difference between actual cash value, which we defined in our previous glossary entry, and “replacement cost.” So, let’s take a look at replacement cost to clear things up. The replacement cost is the real-world dollar amount it would take to replace damaged property (like something you trashed in the venue scenario above), but does not take into account depreciation.
Again, the idea is to make you (the injured party or party who’s sustained damages) whole again, not so that you can benefit and be better off after a claim. So, in the venue’s case, they’d get what’s called “like materials” to fix or replace any damaged areas. If the floor was torn apart, for example, they can’t just go and expect to replace builder’s-grade flooring with top-of-the-line endangered rosewood imported from the Amazon. “Like kind and quality” are the key words here. So, to recap, there are two basic ways to establish the value of payouts from an insurance claim: ACV or actual cash value which does consider depreciation, and replacement cost coverage, which does not deduct for depreciation.
This one seems to trip people up, as well, but the definition is simple. With most liability insurance, you probably will only ever talk to your agent when it’s time to renew, or if unfortunately, you are responsible for damages or injuries. In the latter, it’s important to note that claims against you must typically be as the direct result of your actions or negligence: meaning you are pretty much at fault for whatever ensued. You caused it somehow.
There are things that would be outside of your control, however, like natural disasters or other events that you could not have ever prevented no matter how careful or diligent you were in your behavior. In fact, we say that no amount of planning, safety measures or foresight could prevent these things from occurring, which typically means (if your policy is drafted right), you won’t be liable if a Category 5 hurricane rolls into town during your gig and destroys everything in sight. (Of course, this is an exaggeration, but you get the idea. You wouldn’t be on the hook).
Finally today, we want to cover a really important term in your policy. One that relates to when your policy actually kicks in! It seems pretty obvious, but your policy may include an “effective date,” meaning the actual day it becomes active. It could be the same as the day of signing, but it might not. Be very careful of this; just because you signed something today does not necessarily mean your coverage is instant. Make sure you go over this with your agent or insurance provider, so you know exactly when your policy takes effect and your protection is actually being provided. The last thing we’d want is for you to hit the stage before your coverage period begins and then have to deal with a really unfortunate situation that could have been avoided.
You’ve heard us repeat it a million times, but to be sure, always check over your policy and ask your provider to answer any questions you may have. The best policy (no pun intended) is consult a professional whenever you’re in doubt. Stay safe out there and look for more tips in the months ahead.
And in the meantime, check out https://www.kandkinsurance.com/sites/entertainer/pages/BandsPerformers.aspx – you may qualify to get a quote or even purchase insurance online.