Whether music is your profession or your hobby, you need protection in case disaster strikes — and standard home insurance may not be up to the job.
Anyone who plays or records music on a professional level will have a lot of money invested in instruments, studio equipment, premises and so on, while even a humble home studio can contain many thousands of pounds' worth of gear. None of us likes to think about the consequences of disasters such as fire or burglary, but it makes sense to ensure that your investment and your livelihood are protected. Many people are uncertain whether their musical activities and equipment are covered by standard home contents or business insurance, so we spoke to three of the leading companies selling dedicated policies for musicians, to find out who needs specialist cover and why.
MusicGuard, as the name suggests, specialise in insurance for musicians. Their head, Adrian Scott, explains that MusicGuard was the brainchild of Andrew Selby, who once owned Patrick Eggle Guitars. "He was often asked by the people for whom he was manufacturing guitars whether there was any insurance that could go behind them. It started with guitars because that was his passion, but quickly extended beyond that and now covers all aspects of musical instruments, including ancillary equipment such as laptops, PA equipment, microphones, leads and so on. We're now a subsidiary of Thistle Insurance Services, which is a part of Jardine Lloyd Thompson Group PLC.”
Allianz Musical Insurance, a part of the much larger Allianz group, claim to be the leading musical instrument insurers, and as Marketing and Business Development Team Leader Colin Young explains, their remit extends quite a way beyond instruments. "Anything used in the production of music is our description of what a musical instrument is,” says Colin, "so it might be a cello, guitar, or a recording studio; but it's targeted at individuals and not commercial enterprises.”
By contrast with MusicGuard and Allianz, the Alan Boswell Group specialise in business and commercial insurance. They developed a set of insurance policies specifically for recording studios after the now-closed Leeders Farm Studios — owned by Dan Hawkins of the Darkness — asked them to unify five separate insurance policies into a single one that covered all of their music-business activities. Alan Boswell Group's Associate Director, David Jacob, explains: "About four years ago we were contacted by Leeders Farm, and when we went to see them, they had five different policies. They had one for the public liability, one for the goods in transit, one for the buildings, one for the actual studio contents and also, because it was a residential studio, they had another contents policy for the personal side of it. Those policies didn't gel together perfectly, and they were either overlapping or missing the point completely. For example, most policies cover equipment left in a vehicle with certain criteria, but the transit policy didn't include gear being left in an unoccupied car. So it was covered in transit and at the gig, but wasn't covered whilst in the vehicle. But then, under the instruments cover, there was an element of goods-in-transit cover, which kind of crossed over because it included mixing desks and the like. So it was all over the place, but because it was a business, we put it all together under one commercial combined policy.
"Dan is incredibly well connected and started mentioning our name to people, and we were getting more and more approaches because of that. That policy was a normal combined policy with a few extensions, but we decided to set up something bespoke with Hiscox and they basically tailored the policy to exactly what we needed. So we've tried to make it a one-stop-shop. We did it all via our web site and people just Google us.
"We are business insurance experts, so any business is something we can look after, and recording studios are a business. All we do is find out what's needed and make sure the policy fits. So you are getting a specialist policy from a specialist business insurer, rather than someone who claims to know everything there is about recording studios. I doubt we will ever know everything, but we know enough to get them protected properly.”
Insurance is all about risk, and insurance companies have to be able to understand what risks a particular policyholder is subject to in order to cover them. Home insurance, for example, is designed to cover the risks faced by a building when it is used as a house, but not when it is used as a commercial studio. Nevertheless, many of us with home studios hope that if a problem arises, we will be covered by our standard home policies. Colin Young's advice is to check policy small-print very carefully. "With hundreds of providers and underwriters, each with several products and different brands, I can't say that home insurance won't cover this and that, but some will do a better job of covering what a home studio needs than others. It probably won't be perfect, because that is not what it is designed for or planned to do. Home insurance is for a home, and for professional people who work from home, there is commercial insurance.
"Someone might have a home studio and be semi-professional with it, and they need to be careful they've not stretched their cover. Most home insurers would have a problem with that, and many would say that it is a commercial venture and you need commercial insurance, but whether or not it would immediately invalidate a claim is a grey area. It probably depends on whether what happened was business-related. If, for example, the incident happened overnight when nobody was using the studio, and it wasn't related to the equipment, the insurer might have to pay. But if an amp caused a fire, they might take the view that the amp was only there because you are running a business from home. To use some insurance jargon, it is whether it is 'material to the loss' or not. It doesn't mean that they can just wriggle out of paying, but it might give them a bit of wriggle room. I wish it was easy to say that home insurance won't pay for this and we will pay for that, but it's never that straightforward. But a home contents policy together with our policy is probably about the right level of cover for a home studio.”
David Jacob says that most studios he deals with are in a garage or spare bedroom of a house, and those situations are fraught with problems. "A business operation from a private dwelling negates the cover on most domestic policies,” insists David. "So you have a nice household policy and it all falls apart because you have a business running in the garage, which is on the insured premises as far as the household insurers are concerned.”
The solution David's company have come up with is to strike a deal with two separate insurers: one covering the studio, the other covering the household. "They work alongside each other,” explains David. "The home insurer agrees to write the household insurance and exclude anything relating to the business, on the basis that the business is insured with another company. If it's a big residential recording studio, it can have the whole lot, but if it's a normal home with one room or garage being used for a studio, it works better and is more economical to have the household insurance with an insurer that knows there is a studio there and endorses the studio policy.”
One thing all three insurers point out is that home insurance companies will often cover home studio activity, to an extent, if they are told about it beforehand, but it is likely that they will charge an extra premium for the added risk, and the total premium could end up being more expensive than going direct to a specialist.
Another activity which could potentially invalidate a claim is using some of the home studio's instruments and equipment for gigs, even if this is done on a fairly casual basis. Adrian Scott of MusicGuard explains: "If someone was undertaking gigs of any description and being paid for them, even just for beer money, you could argue that they are doing that by way of business, and most home insurance policies will not cover that kind of activity. They may cover a home-based business if you speak to them directly, and more often than not they will charge a premium to do so, but they certainly won't cover the activity of a professional musician outside the home.”
Naturally, specialist insurers understand that gigging is a very normal activity for many musicians, and they have developed policies to cover most situations. Standard cover usually insures items wherever they are used, be it at home, on stage, backstage, during loading and unloading, or in transit to and from the gig, but things get a little more complicated if equipment is left unattended for long periods of time. "We do unattended vehicle cover as an add-on,” explains Colin of Allianz. "That's for when you leave the gear in the car overnight or for prolonged periods of time. When people get home after a gig at two or three in the morning, unloading isn't always top of the agenda of things to do! But it needs to be out of sight; so in the boot, basically, and there has to be an alarm on the car.”
Interestingly, Colin says that if the van or car full of equipment cannot be parked directly outside the venue and has to be left around the corner somewhere, the situation is still defined as routine loading and unloading and doesn't require the extra unattended vehicle cover. "It is about understanding what is normal for a musician. We understand that if you are gigging, other people will be handling the equipment and it won't be in your sight at all times. A teacher, for example, will leave their instrument in the classroom. They are not being careless; it's normal practice. Or a guy playing a gig will leave his guitar on stage before he goes on, or backstage while he watches the other acts. He's not being careless; that's the risk and that's the cover he needs.”
MusicGuard's unattended vehicle cover comes as an add-on option, and protects the equipment at all times when it is in a vehicle. "That's on a 24/7 basis,” says Adrian Scott, "whereas most policies restrict cover overnight.”
Claiming for damage to equipment or theft of instruments should be a simple process, but insurers will not pay out if the conditions of their policies are not met. Some situations are clear-cut, but others are problematic. "If you have a band into the studio and they accidentally damage something, then it is always covered,” says Colin. "Vandalism would generally be covered, but if you invited someone into your studio and they wilfully smashed something up, that is a bit of a grey area and we'd need to look into it. You could sue the third party for damages, but then we'd have the right to sue them ourselves to cover our insurance losses! So it's a bit complicated, but thankfully not something we've ever come across. I expect that it's normally just reported as accidental damage.
"If someone takes something without you knowing, then they have stolen it and it's covered, but if you've entrusted them with it and they refused to give it back, even if you notify the police, we are still not going to pay for it. There is a black and white exclusion. That's because we've had our fingers burned in the past when people have squabbled about who owns something. One person has ended up with the gear, the other with the claim payment, and we were left with a problem!”
Asked about the issue of lending an instrument and not getting it back, Adrian Scott of MusicGuard says: "I can't give a blanket guarantee that you'd be covered. A standard condition on policies is that there has to be an element of forcible and/or violent removal of the item. If you lent the instrument to an individual and they didn't return it, we would take into account all the circumstances.”
David Jacob agrees that most policies need evidence of a break-in, but his company's studio policy is 'full theft', so that condition does not apply. "The studio still has to meet security requirements, but if somebody walks away with a guitar at the end of a session, it's covered. You'd need to pick up on it very quickly, though, and of course, the insurers will want you to make enquiries to get it back. The police have to be notified, otherwise it is just an unexplained disappearance, which is a different thing. If it is six months down the line and you are doing an inventory and think, 'Oh blimey, we are down three mics, a guitar and an amp!' that wouldn't be adequate. But most claims are just accidental damage where someone has got over-enthusiastic with a guitar on a recording session or done 'The Who' on an amplifier, but it's insured because it's all risks.”
All three of the insurers we spoke to provide UK and worldwide cover to some extent, but it falls to the customer to specify what he or she wants. Adrian of MusicGuard explains that their most basic option is called Home Studio, which covers equipment only when it is at home. "They can extend that on a percentage basis, or elect to go for full blanket cover anywhere in the UK, Europe or the world, and they can amend that at any point. If, for example, they buy the cover on a UK basis but suddenly find they have an event in Stockholm, they can purchase the additional cover.”
According to Colin Young, Allianz's policy is very similar. "You can have Premises Only, which might be suitable for some home studios, but most people take some stuff outside. Then there is UK and Europe or worldwide. You can ring us up, extend it to worldwide, then drop it back down again afterwards.”
The policies David Jacob manages differ slightly in that they apply to engineers, but, broadly speaking, the same cover is available if required. "If you are touring abroad as a performing artist, that's way beyond studio insurance, but if you are a sound engineer going on tour with a band, that's fine. Your equipment is automatically covered worldwide, but your liability is restricted to the UK. That's because it is a policy for a UK-based recording studio. So a sound engineer doing a world tour would need to make us aware of that, and we would extend the public liability for the duration of that contract. But it can all be done pretty quickly. Our clients tend to come to us very late in the day — just as they are about to jump on a plane — but virtually everyone is happy to work on an email basis. Documents are in PDF format and can be emailed, so it doesn't matter if they are not physically at home to collect them and get information. It works for guys who don't do normal hours.”
As Adrian indicates, people who are performing artists as well as studio owners and engineers will require an extension to their policy. The cost of that extension, however, depends on the scale of the act. "The performing liabilities of the Arctic Monkeys would be vastly different to mine if I was playing down the local pub,” explains David, "but I can only think of two or three of our clients who are also performing musicians, and it is so low-key that it is absorbed within the policy. Most are 100 percent engineers, but if you are also a solo performing artist, it is easy to extend the policy for that. If you are in a band, obviously the rest of the band members have no [financial] interest in your studio, so you need a stand-alone liability policy for a performing artist as a group, because it's just too remote from the operation of your studio. But stand-alone performing artist insurance is very inexpensive.”
When a piece of equipment is stolen or damaged beyond repair, the insurer will usually replace the old item with a modern equivalent. In many cases, the new item is a welcome replacement, but many studios also own highly prized vintage items for which there is no direct modern substitute. The insurance specialists we spoke to are well aware of this issue, and have systems in place to help customers obtain appropriate replacements. "The ultimate basis of insurance settlements is new for old,” explains David Jacob, "so if your five-year-old guitar gets damaged beyond repair, you are covered to replace it with a modern equivalent. That saves all the hassle of worrying about values, but if it is an extremely valuable vintage bit of kit, it will be insured on the basis of a valuation. For example, one of our studios has a famous guitar insured for about £30,000. We had a professional valuation done on it, and it is noted on the policy at that value. We've got all of the background on it so we know it's 'the one'. It is irreplaceable, so if anything happens to that guitar you get the valuation price.”
Adrian Scott says that MusicGuard understand that some items are so rare that they can only be found by contacting specialist retailers or waiting until they appear on eBay. "We try to support specialist musical companies and obscure vintage suppliers, and also allow customers to go back to their main supplier if they feel that's appropriate. So if they've built up a relationship with an obscure supplier, we will support the claim through that company. If the customer wants a cash settlement to purchase the instrument via eBay, we will make the settlement on that basis. As long as we are aware, we will support that situation.”
Colin Young points out that, by contrast, home insurers are unlikely to understand the value of a vintage piece of gear when it comes to providing a replacement. "Home insurers are more inclined to say, 'That was a mixing desk so here's another one from our preferred provider. It's brand new and does everything your other one did, so this is what you are getting.' You are pretty pleased when your freezer blows up and they get a new one to you by 2pm the next day, but it's not so great if they are sending you to Argos to choose a replacement for a vintage item. That's just the way home insurance works, and they save lots of money and keep the premiums down by having big corporate deals with providers.
"I'm not saying our claims handlers know every instrument, but they understand when you start saying it's vintage. We've got a certain amount of replacement value put aside, and you can pretty much use that however you like. Some people leave it sat there and spend a year finding their replacement item, some want the money straight away. Valuation of unique things is tricky. If there is no new equivalent, you should insure it for the price it costs to replace it. If it has become very expensive and sought after, you'd better insure it for quite a lot. Alternatively, you can insure it for less and get a modern equivalent.”
The Alan Boswell Group's studio insurance differs from the instrument insurance of Allianz and MusicGuard, because it is intended to cover business activity rather than the individual, although there are many similarities. One cover option clearly aimed at professional studios is Tenant's Improvements, which exists to protect studio construction work.
"Most studios don't own the building they are in,” says David Jacob. "If you are renting an industrial unit, for example, it won't be set up as a recording studio, so you'll need to soundproof, install partitioning, big double-glazed units, extra wiring and so on. Those aren't 'general contents', they are changes to the fabric of the building, and come under Tenant's Improvements. The cover is full risk, so it covers pretty much whatever happens to it, with very few exclusions.”
Another option relevant to studios that can't afford mishaps is Loss of Data. "That's if, for example, you spill coffee over your MacBook and it's irreparably damaged,” continues David. "It will cover the cost of getting an IT expert in to recover whatever they can from the system, so it throws a few thousand pounds at that problem. It's not cover for the subsequent impact of losing that data, though — for that, you have professional indemnity policies. All that could really happen from losing data is the artist loses income as a result of it. It won't cause injury or property damage, just financial strife, and the only way to cover that is with professional indemnity. Not many people take that out, but it's from the same insurer, so it can be tagged on.”
It is the customer who is responsible for stating the value of all low-cost pieces of equipment. Consequently, some people are tempted to over-value their equipment so that they get a big payout if their gear is irreparably damaged or stolen. Understandably, insurance companies have safeguards in place to cope with such claims, as Colin of Allianz explains. "It comes back to what you put on the policy. If you tell us you've got a £50,000 Fender, we will charge you accordingly, because the sum insured affects the price. You dictate the sum, but we are never going to pay more than that. If you insure a guitar for £5000, for example, but make a claim for £15,000, we are still not going to pay more than the sum insured, even if you prove that it has gone up hugely in price, or that you got it wrong and it's worth loads more. That is our safeguard.
"If the value you tell us is too high, you are probably paying too much, if it is too, low you are not going to get a replacement from what we pay out, so you have to be realistic. But we will change a value whenever you tell us. We'd rather people didn't call every week, but when they renew their policy, they should have a look because values change all the time and even currency rates can have an effect. Vintage things can become more in vogue, and new stuff can depreciate. But any item over £10,000 requires a valuation. There doesn't need to be a receipt, just evidence of similar things with that value.”
Knowing that the insurance will replace a lost item is reassuring, but it can take time, particularly if the replacement is in short supply, or if there are aspects of the case that the insurer wants to investigate. To enable musicians and producers to keep working, insurers provide hire replacement cover, which, in the case of Allianz, gives the policy holder up to 10 percent of the insured sum. "If something is worth £10,000, you could hire something up to £1000 while we are settling the claim,” says Colin, "and the hire costs are not deducted from the final payment. But it's not something that gets used that often because we are quick with the claims.”
One thing insurance companies do not want to do is spend time and resources administering bespoke policies for each one of their customers. The studio insurance from Alan Boswell Group, for example, is banded, so that customers choose cover based on whether they have up to £30,000, £60,000, or £90,000 of technical equipment in the studio. Only beyond £90,000 is a bespoke quote arranged. Allianz and MusicGuard operate a slightly more detailed banding system and provide on-line forms that can be used to generate instant quotes based on whatever level of cover is selected from a series of drop-down menus and tick boxes. MusicGuard, for example, include an option for adding a warranty covering the electrical and mechanical breakdown of equipment.
It's certainly never been easier to arrange suitable cover for musical equipment, personal liabilities and studios, and it is reassuring to find insurance companies who have knowledgeable staff and custom-designed policies. Of course, that fire, flood, burglary or terrible accident may never happen — but if music is your passion or livelihood, can you really afford to gamble on that?
Safeguarding equipment isn't the only aspect of insurance that musicians need to be concerned about. Public liability insurance comes into play when a third party is injured, or has their properly damaged, as a result of using a studio or faulty equipment, and subsequently raises a claim against the policyholder. Public liability is included in MusicGuard's standard policy. "Public liability covers injury or damage to a third party in whatever circumstance,” says Adrian Scott. "The equipment you plug into someone else's power supply might cause an electrical fire, for example, or it could be injury someone sustains through electrocution or tripping over a wire in a poorly maintained studio. Whatever the case, there has to be proof of negligence on your part and a liability claim made against you. The classic scenario is someone walking along the high street and tripping on a loose paving slab. They contact the council and that goes to the insurers, who are then responsible for paying damages.”
For commercial studios, public liability cover is extremely important, particularly when the well-being of customers is their responsibility. Yet, as David Jacob explains, it is often overlooked. "A lot of the studios that come to us are one- or two-man operations who don't realise what they need to protect themselves, and many of them aren't even thinking about public liability. Our policy covers studios and their sound engineers, so if they are going out and recording gigs, they get liability cover in case they cause injury or damage third-party property. So it covers their activities as an engineer or recording studio throughout the UK.”
Crucially, the policy also covers anything that can be considered a normal part of the studio's activities, so, for example, the actions of volunteers and other people working on behalf of the studio are included. "It's not going to cover someone setting up a burger stand or anything like that,” says David, "but as long as it is in line with normal recording and sound-engineering practices, it picks up the liabilities for it.”
Allianz are mainly concerned with insuring instruments, and public liability is something they offer as an addition to their standard policies, for reasons explained by Colin Young. "We do public liability and personal accident as an add-on, but if you have a proper professional studio, you need a commercial insurance policy that covers more stuff than we have got. We wouldn't do a loss of earnings policy, for example, and you'd probably need that in case the studio was out of action for some reason. In a way, there's not a huge difference between running a factory and having machines worth £100,000, or a studio with musical equipment worth £100,000.”
Hardware equipment has a tangible physical presence, and it's easy to see how it fits into a conventional insurance framework. However, most studios and some live performers nowadays have a lot of money invested in software, which throws up challenges for insurers. The Alan Boswell Group's approach is to cover software as part of the value of the computer system, as David Jacob explains: "Normally, recording studios have software suites that cost a lot more than conventional office software, so it's a legitimate concern. We'll pay to replace the software and licence, but these things are often recoverable if the studio owner has registered their copy. Software as a service, or where the client pays a monthly amount to access an online application, doesn't usually need cover, as these services tend to hold all the data in the cloud, and provide access via any computer or browser. In terms of proof, keeping the original receipt is sensible and probably needed for tax purposes anyway. We look for evidence of ownership, and the receipt is usually the quickest way to show it.”
Adrian Scott of MusicGuard says, "We won't cover home-made software, so it needs to be a legitimately purchased package with the licences, and we can't pay out if there is no proof of ownership. We are quite happy to receive proof in things like bank or credit-card statements, the original purchase receipts, or even things like boxes, manuals and photos of the equipment being used. In an ideal world, you'd have every receipt stored safely, but we are very flexible in the way we expect to see proof of ownership. We also expect there to be an element of backup, but if a backup disk doesn't reinstate, the cover will kick in.”
Allianz, however, have yet to include software in their cover. "Software is not something we've managed to master from an insurance perspective,” admits Colin. "The issue for us is being confident that there is an actual loss. With some things, you lose your licence or code and it's a genuine loss, but with other licences you can probably log back in and get it again, so we find it very hard to put a financial value on the loss, and it's not something we are comfortable with. It comes up whenever we talk to producers and is something I've got in mind to look at again. So we cover everything musical instrument-wise but, at this point, software is the one exception.”