Sound engineer insurance – cost and types of policies
If you are busy providing professional services as an audio, recording or sound engineer, then you should be covering your risks with proper sound engineer insurance before any of the potential events that can end up costing you substantial penalties or losses occur.
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There are many ways in which your business activities are vulnerable. The benefit of proper insurance is that you are covering unknown possible events with a known and very reasonable outlay.
Ask yourself a simple question. Can you afford the reasonable costs, or can you afford to NOT have sound engineer insurance for your business?
If your Sound Engineering business runs without the right insurance, you are taking on a risk not just of losing some money but of a complete wipe-out.
There are many different aspects in the work of providing sound and audio engineering services to customers, and some of these can involve special risks.
In the short list of the most common roles of audio engineering service providers, we will try to pick out the most important aspects that should be covered by your insurance.
Sound engineering is a wide field that can have you requiring a wide range of specialized skills. Many kinds of diverse equipment is required in this profession, and each has its own needs in terms of skills and responsibilities. Some of the most common tasks in sound engineering include:
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- Audio engineer (also referred to as a recording engineer or technician)
- needs to capture audio channels of a live performance such as concerts, conferences, or outdoor television broadcasts. In live recording, the equipment is more basic, capable of being transported, set up and removed easily.
- works on top-of-the-range equipment in a highly specialized recording studio
- a recording engineer is responsible for the technical aspects of audio recordings, including selection and placement of microphones, signal capture, routing and processing, and general studio setup
- troubleshoots any technical problems and works with producers all through the process
- Sound engineer
- must ensure that an audience at a live show can hear the output clearly
- must ensure that microphones and other equipment are active, and preferably have backups in case of any failures during a live performance
- must be able to troubleshoot any technical issues that may suddenly arise during an event
- Mixing engineer
- takes all of the individual recordings and blends them into a single recording.
- may need to add effects like reverb, special effects, or other processes from instruments or sections of other songs
- combines multiple tracks to produce the desired audio.
- monitors the levels of all of the tracks so that they combine properly, with balance in the mix.
- Mastering engineer
- has the final role in editing the output of the sound track that has been produced by the mixing engineer
- from the mixing engineer, the output gets adjusted to be compatible with a range of target output devices, like speakers, TVs or radios, headphones etc.
- prepares the physical files for release as physical or digital medias
- checks that output files have optimum settings of quality, and adjusts technical settings like EQ settings
- adds recording industry standard metadata, such as ISRC codes.
- Multimedia audio engineer
- is responsible for creating audio recordings that can be incorporated in games, movies or any other multimedia event.
What kinds of insurance policies do sound engineers need?
Like anyone working as a service provider, sound engineers have most of the basic risks that come from operating any business, as well as several that are special risks that relate to the specifics of the kind of operation.
In this document, we will try to offer insights to help you to stay ahead of all possible risks by preparing for them. In the end, having the right insurance will help to reduce any chance of losses, minimize your costs and keep your operations running smoothly.
We can offer insights into the best options based on our knowledge and experience in small business, and specifically designed to meet your needs.
What types of insurance does every sound engineer need?
Like any business that is provisioning services to the public, there are three basic risk areas, and within them several separate kinds of risk. The main areas are:
- Liability cover
- Commercial cover
- Legal requirements
Why is liability insurance essential for sound engineers?
Any business operation has responsibility towards the general public in case some accidental injury or damage occurs to anyone in the course of you delivering the services you are providing. This is known as General Liability insurance, but can also be called Public Liability insurance.
You are also responsible for the quality of the services provided, and for this you should be investigating Professional Liability insurance (also known as Errors and Omissions or E&O insurance.)
In the rest of this article, we will use the names most familiar to people engaged in the sound recording business, which are General Liability Insurance and Errors & Omissions Insurance.
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General Liability Insurance
This is the most fundamental protection for any service provider that is interacting with the general public. The coverage provided by a General Liability insurance policy will protect you from claims from any third party that you have caused accidental bodily injury or property damage to them (not to an employee or yourself).
With this cover, you will also be protecting yourself from any claims that you caused damages like libel or slander.
The essential difference between this kind of insurance and Professional Liability insurance is that it covers you only for accidental injury to a third-party or damages to property belonging to a third party that is not a loss coming as a result of your business activity.
These are a few examples of situations where general liability claims could arise:
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- Suppose you are contracted to set up a recording at an external event, then any accident that results in physical damage or bodily injury to a party on the site, customer or visitor, could lead to a claim against you.
An example could be if a person trips over cables that have been laid between your equipment that cross over paths or walkways
. If someone trips and falls, you can be held responsible for the resulting physical damages, including medical treatment.
- Another possibility is if you have your own studio and allow recordings to take place there.
If anyone visiting the studio suffers some injury, such as a “trip and fall”, the physical damage or bodily injury to any party could lead to a claim against you.
The claims that are covered by general liability insurance policies normally include:
- medical bills arising directly from an injury. This can include claims for ongoing pain and suffering following from an injury, along with claims for the loss of income for missed workdays
- cost of replacing or repairing any property destroyed or damaged
- damages may be agreed to in a settlement
- the legal costs arising from a defense against any claims made. The responsibility of providing a defense cover is regardless of fault.
Up to your general liability policy limit, your own defense costs, and any costs awarded by a court, are fully covered.
Professional Liability (aka E&O) Insurance cover
Like all other service providers, you have what is known as the “duty of care”, which basically means that you must conduct your business properly, delivering services according to your promises to customers, and also up to accepted standards.
While you may feel confident that the quality of your work will always be satisfactory, just the same as for any business, you can be sued for negligence if your client’s expectations were not fully met.
This can happen when a client claims that you made a mistake, or offered poor advice or have been negligent.
Professional Liability insurance cover is especially important when you are offering a specialized service like audio or sound engineering, since it is difficult to prove its value in a court case when the actual requirements may not be easy to explain.
As well, even if you eventually get a judgment in your favor, the legal expenses and damage to your reputation could end up costing you more than the claim itself.
The most significant aspect of Professional Liability insurance is that your legal defense is taken over by the insurance company right from day one. In this way, you are guaranteed the proper level of legal skills, advice and actions right through to the end.
If you run your sound engineering from your own premises, owned or rented commercial buildings or parts of your home, and have filled it up with special equipment, you must insure the value of the buildings and contents with Commercial Property insurance.
Such cover protects against losses and damages to physical assets caused by uncontrolled events like fire, smoke, weather storms, and also from external events like riots, thefts or vandalism.
Because of the special nature of recording equipment, you should make sure that you have cover for the particular risks relating to the equipment so that any claim cannot be rejected.
Equipment insurance is necessary if you have a lot of money invested in specialized equipment like recording gear, music equipment and speakers, cameras or other paraphernalia.
You may also be renting additional equipment depending on the size or type of event in which you are working.
This can represent a significant liability, so you should cover yourself against all possible risks, including fire, water damage, malicious damage, theft etc.
Business interruption insurance
When you’re running an independent sound engineering business, either as a sideline or through your own registered LLC company, business interruption insurance is something you should think about in order to provide you with protections from loss of income that can happen if there is some development outside of your control cause financial losses.
Lately, there have been more such events, due to extremes in weather causing floods and fires.
As a result many sound engineers and other service providers have been forced to temporarily close due to external causes.
For example, if you have been booked to provide your studio for some recording events, and you have already accepted pre-payment so that you could go ahead and rent or buy necessary equipment, or rejected other work, suppose there is complete road closure in your area that ruins access to your building and you are forced to close for several weeks or months until the local authorities can restore the roads.
In a case like this, business income insurance will cover your business’ fixed unavoidable expenses like rent, interest on your business borrowings, or any wages due to your employees who now have to be laid off.
Business income insurance can also make up for your own lost income that you would otherwise have earned if you had kept operating as normal.
Business Owner’s Insurance
Some insurance companies offer a Business Owner’s Policy (BOP), which is a combination of General Liability, business interruption and commercial property cover, all bundled together.
The only consideration for BOP insurance is that it is available only to LLC companies, and not if they have more than one hundred employees or annual sales of more than $5 million.
Could short-term insurance be a choice?
If you operate only with occasional or seasonal turnover, it may make sense to tailor your insurance to cover only the times when business is active.
Most insurance policies are issued on an annual basis with premium charges based on their cover for 12 months. However, some insurance companies do offer policies where you can nominate a specific period when you need to be covered.
You can get the cover for the specified span of weeks that you are working so that you are protected during that specific timeframe of activity. You only pay for the period of protection you need. This gives you lower costs but still with the risk cover you need.
Legal requirements of insurance
Workers Compensation insurance.
In almost all states, you have to carry worker’s compensation insurance if you have more than a specified number of employees.
The term “employee” can mean anyone working for you at any point, even as a full-time, part-time or casual employee.
Worker’s compensation insurance covers you against any claims if an employee experiences an injury or becomes sick or directly as a result of their work.
Workers’ compensation legislation is different in each state. The laws in connection with an unsafe work environment are contained in the OSHA requirements.
How could insurance for a sound engineering business cost?
The price you pay for the various insurance policies depends on the size of your business as well as on the level of liability you will face. Another factor to take into account is the frequency of recordings.
It would be best to discuss all your insurance needs with insurance brokers or agents who are familiar with your area and with this type of specialized business.
Based on our own experience we can provide very general guidelines:
|Policy||Level of cover||Likely cost per year|
|General liability||$1 million per year, maximum $250,000 single claim||$600 – $1100|
|Professional liability||$100,000 full year, $10,000 single claim, $500 deductible||$600 – $900|
|Business Owner’s Insurance||$1 million general liability + calculated commercial property cover||$650 – $800 & $0.30 – $0.45 per $100 IV|
|Commercial property||Calculated on insurable value (IV)||$0.35 – $0.50 per $100 IV|
|Equipment||Per $10,000 value||$120 – $250|
What should be the limits on coverage for sound engineers’ insurance
You should set the levels of cover based on the size, type and complexity of your own business. Without a large workforce, you can generally accept the minimum coverage that most insurance companies offer. The major determinator of the minimum cover limits depends heavily on the total size of your operations
Is sound engineers insurance worth it?
To answer this question involves another question – Can you afford to not have protection? For businesses of all sizes, accidents happen, unforeseen events occur, and you cannot guarantee that circumstances will remain exactly what you expected when you took on the work.
All insurance comes at a cost, but the peace-of-mind that it gives, by protecting you and your company from possible claims and losses that may come from unexpected sources, makes the value clear.
Are audio engineers and sound engineers the same?
Generally, the terms ‘audio engineers’ and ‘sound engineers’ are often used interchangeably. Most often, though, ‘audio engineers’ work in studio recording, and ‘sound engineers’ in live concerts and events. As well, a recording engineer could also be known as an audio engineer.