As a responsible performing artist, you’ve made sure that your tour dates are booked, travel and lodging are taken care of and that you’re fully insured for that big gig. Right? No? Well, we’ve written quite a bit on the importance of entertainer insurance in previous articles, so those are well worth your time if you plan on performing live in the future.
In case you missed some of our past entries on insurance matters for musicians, you can catch up with these links below or just type “insurance” in the search bar above.
DON’T MISS: 5 Things Your Band Needs to Know About Liability Insurance
AND: Common Exclusions From Entertainer Insurance Policies
Now one of the things we want to do is keep an updated glossary of terms relating to insurance that musicians should know. The goal here is to provide a free resource that explains, in common terminology, what certain things mean and how they apply to you. The first list of ten terms are presented below, 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 basic terms and phrases relating to insurance for live musicians.
Actual Cash Value (ACV)
If you come across this term or acronym, then something has likely happened to someone’s property, and someone’s liable. Actual cash value is just one method to figure out what an insurer will pay the insured for property or items that have been damaged. Usually this is figured out either by subtracting the deprecation of the property/object from its current replacement cost, or by assessing a reasonable fair market value to the property/object.
In real world terms, if you carelessly damage the equipment of a venue, the venue may receive payment for the cost to repair that gear, or its replacement costs minus depreciation (they’re not going to get full new price for used, old stuff, in other words).
Admitted Company
This is an important one, and we’ll let our friends from K&K Insurance explain:
“When choosing an insurance provider, always ask about the financial stability of the carrier; a high rating (A or better) by an independent rating company such as A.M. Best Company is the safest choice. Also, choosing a carrier that is “admitted” (licensed) is preferable because choosing an insurance company that is non-admitted (called surplus lines) may require you to pay extra fees or taxes.” –Lorena Hatfield, Marketing Resources Manager
Claim
Uh-oh. Something has happened. But this does not necessarily mean you’re getting sued because of actions you took, or even negligence. That’s one clear distinction we want to make, because there seems to be some confusion on the matter. Just because a claim is filed, does not mean you’re personally being sued. With lawyers. And courts. And judges. And sketch artists. I mean, unless you really did something heinous and you can’t come to an agreement during the claims phase…
What it means, simply, is that the affected party (let’s keep using the example of the venue that’s had their gear or stage damaged by a band) has just made a request from an insurance provider to be compensated for their loss. They want to be made whole again, which is fair enough, and this is the first step in the process. It’s the reason you have insurance policies in the first place, so that you can have them deal with any claims that may arise, whether valid or frivolous. That’s what you’ve contracted with them to do (and why you pay them), so work with your insurance provider closely to deal with any claims that may arise. Hopefully you don’t ever have to see a courtroom.
Claimant
To go with the above definition, the claimant in this case would simply be the venue, not the performer. There seems to be confusion as to who’s referred to as what, so there you have it. The person (or entity) requesting the compensation is making the claim, therefore they’re the claimant. Simple, no?
Deductible
This is another commonly misunderstood one, so let’s make it easy: here’s what you’ve got to kick in before insurance takes over. In other words, it’s the amount you’re responsible for before your provider starts covering your butt. But again, you’re gonna be super careful angels out on tour, right?
Endorsement
A lot of folks seem to think this means proof of insurance, or that your insurance provider is “endorsing” you and covering you. No, what it really means is that an addition or amendment (sometimes called a rider) has been added to your policy that adjusts your coverage in some way. Keep in mind this may take precedence over your existing contract, so read and agree to all changes to your policy carefully.
Exclusions
Just like it sounds, these are things that your insurance provider WILL NOT COVER. So, make sure you understand what they are before you hit the stage. We did a whole write-up on common exclusions, so you’ve got no excuses!
Indemnification
This is a big word that means something simple: it’s just relating to the compensation provided to the claimant for any losses incurred. Let’s use it in a sentence: when you indemnify another party for their loss, like an insurance company may have to do, you probably don’t like doing it.
Liability Insurance
Here’s a key one, because this is really what we’re talking about when it comes to live performers. And it differs from car insurance, renter’s insurance, flood insurance and other types of insurance you may already have. Liability insurance specifically provides coverage when loss or damage occurs due to your actions or negligence, and this can typically mean bodily injury as well as property damage. You did (or failed to do) something; you’re now liable or responsible for it.
Limit of Indemnity
Since you now know what indemnity means (see above), this one should now make a whole lot more sense. These are also known as liability limits, and as you may have guessed it’s the max amount your insurance provider is going to pay on a claim against you. So, if you do something beyond the scope of comprehension and cause untold millions in damages, you’ve likely gone WELL above your limits to the point where you’re gonna be on the hook for a lot of dough, far more than any insurance will ever pay out. But let’s hope that scenario never plays out, shall we?
Underwriter
Sometimes the most misunderstood part of the process, an underwriter is the person who first determines whether you are even insurable (I’m looking at you, fire-jugglers!) and then (and perhaps most importantly), decides and analyzes the risk you pose to come up with your policy’s price, or premium. This is the person who ultimately determines your rates, as well as your coverage.
FOR MORE INFO…
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. They have the answers, trust us. 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.