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In Case of Insurance, Don't Be Undercovered
Asking the “what if’ question is how many a playwright
proceeds down the road of scene development. It’s the question every
theatre company can ask as a stepping-off point to purchasing complete insurance
coverage. It’s the question to ask before ever beginning the agent search
or revising a current policy. The key word “negligence” is the hindsight
that can turn an overlooked “what if” into a “woulda-coulda-shoulda”
claim.
Acquiring insurance coverage doesn’t have to be the drab, dreaded process
that right brainers automatically shun. Get creative with your “what
if’s” and who knows, it could turn into the next play on the marquee.
Following a carefully executed plan to secure coverage and working with a
reputable agent can get you the protection you need and can afford.
Act 1: “Anticipation”
Like a director scanning every detail of the dress rehearsal, you perform
the same inspection while wearing a different hat. You ask, “what if”
the carpeting is not smooth, or an extension cord is temporarily stretched
across an aisle for just one little ol’ show and someone trips? What
if someone is sent careening when a set of improperly anchored temporary stairs
collapses, falls through a trap door that has become faulty, steals a camera
because it wasn’t locked up, or a small child accompanying a fan, post
show, into a dressing room swallows some beads?
Any such scenarios can translate into your negligence. When seeking coverage,
list everything you can think of, estimate its worth, what it would cost to
replace, (those beads are gone), or what it might cost medically to retrieve,
remedy or repair. Make sure your estimate is high enough to protect you if
you are sued after an accident.
Here are some scenarios to contemplate while trying to figure out what to
cover.
Scenario 1
A fire rips through an owned theatre resulting in total loss. The insured
has to come up with additional funds to rebuild the building, which was insured
for $210,000 but costs $300,000 to rebuild. In addition, the business income
coverage is $10,000 and the insured has to pay $18,000 to rent another space
during the 12 months it takes to rebuild.
Scenario 2
A volunteer trips and breaks a leg exiting the stage. The injured person’s
lawyer sends a demand package to the theatre’s insurance company. The
insurance company pays a hefty settlement and then cancels the insured’s
policy. Finding replacement coverage is difficult and almost double in cost
for less coverage.
Scenario 3
Damage to property caused by an automobile is excluded from general liability.
A theatre group on the West Coast rents a truck to move sets from a house
to the theatre. The driver of the truck backs into a sign at the rented theatre
building. The insurance company denies the claim because the group does not
have coverage for property damaged by a non-owned and hired vehicle.
Act 2: “Agent”
Now that you’ve assessed the value of all things theatrical, Act Two
is finding a reputable insurance partner. Luckily for you, the insurance community
is regulated and you can view those ratings at the AM Best Company’s
Web site, www.ambest.com. To check the reputability of insurance companies
and find each state’s insurance department, visit www.naic.org/state_web_map.htm.
Reliability rating reports are also available on some companies from the Better
Business Bureau.
But a general insurance agent might not provide the specific coverage you
need or help you think of additional perils you may face because he or she
doesn’t know your business well enough. Seeking insurers that have previously
worked with theatres and arts organizations can be a real plus in crafting
the perfect policy.
The Ponta, Castle and Ingram (PCI) Agency has developed a program specific
to the theatre industry. Once a PCI agent determines the needs of a theatre
company, acquires quotes from potential insurance companies and assesses which
one offers the best price and coverage available, a policy is drawn up. Kim
Brown, Theatre Program Manager, states, “PCI only writes with companies
that are rated A+ or better by the AM Best Company, based on financial strength
and credit quality.” You’ll need to ask your agent what the rating
is before going any further.
Act 3: “Coverage”
So you made the call. There you and the insurance agent are, formulating your
exclusive insurance policy package. Guess what? Scratch that. You and your
insurance agent are formulating plural insurance policies. Yes, more than
likely, there will be more than one. The following items are likely to take
front stage.
Property Insurance
Property insurance covers all the items you designate (building, business,
personal property, theatrical property, etc.). In the event that someone else
damages, loses or steals any of it, your insurance company pays you for it.
Some companies cover extra expense in the event that you cannot perform at
your regular location, and will pay for moving the show. Loss of business
income is included to cover lost revenue in case a production is shut down
for a covered loss. Theft of box office monies is also covered.
General Liability
General Liability covers bodily injury, property damage, personal injury,
including slander or libel, and advertising injury. It’s caused by your
negligence, so your insurance company pays someone else.
Property and general liability are generally packaged together and you should
know that no two packages are wrapped the same and may have different contents.
Your agent can recommend what coverage to have. Ultimately it’s your
decision.
“If you are a theatre building owner, besides the building, you want
to insure everything that is bolted down, for replacement cost,” says
Brown. That’s every seat in the house and all theatrical property to
include sets, costumes, props, stage rigging, sound equipment, lighting equipment,
anything related to a production. Concessions and office equipment are combined
under the category of business equipment.
If you are a theatre renter, insure everything you bring in that you would
want replaced and for any alterations or improvements you make to the theatre
owner’s property. Renovating the bathrooms to bring them up to code,
redesigning the entrance for handicap accessibility, replacing the roof or
installing a sprinkler system are examples of improvements a tenant might
make to a building owned by someone else.
If you are either renter or owner, you will want to “what if” it
all to death in order to determine the high-end cost of damage, injury or
possibly death. If the building burns to the ground, for example, what would
the same quality of rebuild cost, including removal of debris beforehand?
If you are a traveling company, be sure your coverage “floats” or
follows your theatrical properties no matter where they are.
Whether you want it or not, since 9/11 every policy has included terrorism
coverage. The insured—that’s you—can opt to reject the coverage,
but terrorism coverage on a workers' compensation policy is mandatory and
cannot be deleted.
Workers’ Compensation
It’s the law—for cast or crew receiving pay (including 1099 or W-2
income) other than an Equity 99-Seat Plan stipend.
Automobile insurance
Insurance to cover a vehicle the company owns, like workers’ comp, varies
from state to state.
Cancellations
Policies for cancellations, such as for weather conditions, are expensive.
Getting quotes will help you decide if it’s worth buying.
Environmental factors will cause policies to vary from state to state. To
find out if you qualify for flood coverage, contact the National Flood Insurance
Program at 800-638-6620.
Directors and Officers
A directors and officers policy provides funds to defend and indemnify (compensate)
board members if sued for some aspect of service. The list of possible claims
includes mismanagement of funds, wrongful termination, discrimination, breach
of loyalty, conflict of interest and wasting the theatre group’s assets.
This is an important policy to consider since directors and officers can be
held personally responsible for acts of the company.
Liquor Liability
Liquor liability requirements differ from state to state, but one of the key
elements determining the stipulations that will apply to your situation is
whether or not you charge for drinks.
Volunteer Accidents
Unfortunately, volunteers are not excluded from general liability, which leaves
the theatre group vulnerable to claims filed for injuries incurred by volunteers.
Separate accident policies can be purchased that will provide accidental death
or medical coverage for your volunteers.
The Mechanical or Systems Breakdown
This policy covers mechanical equipment (such as boilers and air conditioning)
against losses due to mechanical breakdown, electrical disturbance or steam
boiler explosion.
This all may seem overwhelming to a small company just starting out. Brown
is encouraging: “Coverage is usually very affordable. The premium will
vary based on your size, location and what you need covered.” Considering
each theatrical anomaly, it’s difficult to quote cost, but Brown has
noticed that just the general liability/property package can start as low
as $500 and go up from there, depending on what you wrap inside.
… and what if the leg gets broken?
So the dreaded moment comes, the swallowing of the beads, what to do? The
same as in any claim situation.
As soon as possible, document what happened in an incident report, no matter
what the situation. Develop your own form that will record: name, phone number,
address of injured, approximate age, what happened, what type of injury it
was, whether or not the injured person was taken to a hospital, if the injured
person declined medical treatment, and any witness names and phone numbers.
Even if the incident is considered minor, call the agent and let him or her
know what happened. Even if you don’t file a claim at that time, just
make the agent aware of it. If it’s a break-in and theft, list the items
stolen and police report number. If it’s a fire, provide the date and
time it happened. Get as many details as possible. “Unless you can wait
until the next day when offices are open, most policies provide a 24-hour
claim number to call in case of an emergency,” says Brown.
To sum it up, the real negligence to avoid is inadequate coverage. In the
event that the costs of replacing, repairing or retrieving are more than the
limits you have in your policy, you will be responsible for the balance. This
may be well over what a theatre can afford. Check your policy. Talk to an
agent. The value of adequate coverage can’t be overemphasized.
Check out our forums to post other questions or read some of the latest in
insurance at www.dramabiz.com.
