Whether you are a Corporation or a Sole Proprietor, to be in business without adequate insurance is the kiss of death. Would you drive your car without insurance? Your state probably won’t let you. You can’t get a home mortgage without homeowner’s insurance. To operate a business without adequate insurance of several different varieties is asking to be bankrupted and possibly jailed, as well.

The purpose of this document is to bring you up to speed on what types of insurance a business needs to have to ensure it’s security, how much insurance you need, and how to go about getting it.

The are several types of insurance that you, as a business owner, need to have in place.

1. Equipment Insurance - Insurance to cover your tangible property.

Everything you own, from consoles to tools, should be covered. Compile a complete inventory of every item in your warehouse that has a dollar value. This inventory should include:

• Item Name,
• Model,
• Serial Number,
• Date Placed in Service
• Price Paid
• Replacement Price

You should update the replacement price once a year. When purchasing insurance, you will simply submit this inventory. Most insurance companies will allow you to group all items under a specified price into one group of “Miscellaneous Items”. Why cover a $50 DI if the deductible is $100? What if your warehouse burns down or is burglarized, or your truck is stolen, and you lose your entire rig? Those $50 items will really add up and you need to replace everything.

So you need to insure your gear. What should the scope of coverage be? You want coverage to protect your assets 24 hours a day, 7 days a week, 365 days a year, against theft, water damage, fire damage, accident, anything short of war. This is also known as an “Inland Marine” policy. The one thing to watch out for in this policy is the Exclusions. When being presented with a policy, be sure to read the Exclusions paragraph. The most important feature of an asset insurance policy is your ability to cover your gear for its current replacement cost, not what you paid for it. If you lose a piece of equipment and it’s insured for the price you paid for it four years ago, you are not going to be able to replace it with the check you receive from your insurance company. For this reason, you must be very diligent in updating your replacement values every year.

Musical instruments are not like a car or a living room suite. You can’t trust them to a homeowner’s policy, because the minute you make a dollar from their use, they become professional equipment and your homeowner’s insurance will disallow coverage. You must select an insurance company that understands your business and covers musical equipment routinely. Otherwise, when it comes time to file a claim, settlement will not be quick and painless.

2. Liability Insurance - Insurance to cover the cost of accidents involving or caused by your professional equipment or services.

You are responsible for any kind of injury to a person or damage to their property inflicted by your equipment or by persons in your employ. In today’s litigious society, even someone tripping over your snake and bruising himself from the fall can sue you, not to mention much more serious incidents. Every piece of gear you own is a potential hazard. Liability insurance is to protect you from suits arising from the myriad of potential things that can happen on any given job.