|What's the best way to insure your music and sound gear? If you consider your gear personal property, your homeowner's or renter's insurance policy should protect it. Ask your insurance carrier to be sure. However, if you do use your equipment for business (and hopefully exploit the tax advantages of this strategy) you must check with your insurance carrier. You may need a rider to your personal policy or even a separate policy altogether. Go visit your insurance agent in person and explain your situation fully and accurately.
Also note: if you have people visiting your business (project studio, for instance), you may also need to consider liability insurance to cover accidents. The same rules applies: if the people are there for business reasons, make sure your policy covers it.
Here are some of the questions you need clearly answered.
What perils are excluded?You need to be sure that you aren't taking any unnecessary risks. Make sure that the perils you may face (fire, water, theft, and natural disaster) are covered. Acts of war are never covered. Of course, the chances of a war wiping out your equipment are rare. And even if it did happen, you'd probably have a lot more to worry about besides the loss of your gear.
When and where is the coverage effective? What happens if you cover only home use and something gets stolen from your car on the way to a gig?
What is the premium? This is the amount you pay for a certain level of coverage. Make sure the coverage amount you choose accurately reflects the gear you have or will replace. Don't pay for coverage you don't need, but don't risk coming up short either.
What is the deductible? This is the minimum loss you must have before the insurance kicks in. For example, if you have a $250 deductible and suffer a $1000 loss, upon approval of the claim, the insurance company will send you a check for $750. You are responsible for the first $250. This next point is really important: Unlike medical deductibles which accrue during the year, loss policies are per incident. You will pay the deductible for each claim that you make. If gear keeps disappearing, and you send in multiple claims during the year, it could end up costing you more than you planned.
What are the policy limits? This is usually a total dollar amount per occurrence. Is this enough to cover you in the event of total disaster? Also, does the policy pay replacement cost or cash value? Replacement cost pays you the amount to fully replace the item lost while the cash value pays only the item's current market value. If your synth gets ripped, and you choose to replace it, you will get the amount needed to buy a new, comparable synth that is "like kind and value" (even if it costs more than the original purchase). Make sure you have a clear understanding of what your policy provides. At cash value you'd probably receive only 10-20 percent of the original price you paid. Some policies say that if you choose not to replace the item you will only get the cash value. One of my clients suffered a theft loss and after spending countless hours totaling up the replacement value of the stolen items decided not to replace them. They were surprised when the insurance settlement came, as it had the far, far lower cash value figures instead of the anticipated replacement numbers.
How are claims settled? You want details about what you must do to expedite approval. For example, if an item gets stolen, does the insurance carrier require a police report?
What documentation do you need? Do what the insurance carrier suggests. At the very least, record an inventory of all your gear including name, model number, serial number, original purchase price, and purchase date. Don't forget all the software on your computer, too. Keep these records off-site and also give a copy to your insurance agent to keep with your file. This is the evidence you would need in the event of a loss. You may want to have regular appraisals for certain items, such as vintage gear, and file them with your insurance agent. Also, take photographs or a videotape of your gear. Use a camcorder, focus on every piece of gear for a few seconds, and describe it. Store this videotape off-site.
Take this article to your insurance agent and make sure you get the answers you need to protect your gear investment and sleep better at night.
Jeffrey P. Fisher's latest book, "Moneymaking Music" joins his three other best-selling music books: "Ruthless Self-Promotion in the Music Industry," "Profiting From Your Music and Sound Project Studio," and "How to Make Money Scoring Soundtracks and Jingles." Get more information on his Web site at www.jeffreypfisher.com
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