Almost seventy percent of artists and crafters strongly believe in a longstanding myth. As uncomfortable as the conversation is, and no matter how distasteful it may be, homeowner’s insurance is greatly misunderstood when it applies to artists and crafters.
Let’s attempt to simplify the discussion. In standard homeowner’s policies “Business Pursuits” are specifically EXCLUDED. Courts around the country generally define business pursuits as “continual activities carried out for financial gain.” In some states this can include almost any activity resulting in some form of revenue or exchange of money, even if the money comes from a tip jar. The pursuits don’t need to be full-time or even your primary source of income, either. “Business Pursuits” can simply be your hobby where you occasionally sell a product for money or trade.
The Craft Emergency Relief Fund (CERF), vigorously advises that artists and crafters purchase insurance for their various activities. Too many artist and crafters discover the absence of proper protection at the worst time – after the disaster. Some insurance companies recognize the need to extend coverage to their clients who have small home-based businesses. This coverage can extend to liability or property, usually with costs that range anywhere from $250 to $1,500 depending on your activities and location. If you take your business away from the premises, additional extensions and premiums may apply.
Even with the additional premiums, the most widely used endorsement for business pursuits still has limitations. The business must be owned by the named insured on the homeowner’s policy, and resident family members, and must not exceed certain revenue benchmarks. Additionally, this extension will not cover anyone engaged in manufacturing, selling, or distribution of food or personal care products. Basically, the homeowner’s policy is written for homeowners, not necessarily small businesses.
Business Owner’s Policies (BOP’s) provide fantastic coverage, but cost, at a minimum of $500 per year, often exceeding $1,000 due to the broad coverages automatically included. However, they do not necessarily include “Products Liability,” for artists or crafters engaged in manufacturing. There are a handful of specialized products geared towards the artist and crafter that are both affordable and offer the basic coverages needed. For those who manufacture a product, they can extend protection benefits to this exposure as well. One or two specialized programs even offer their coverages for shorter periods of time if you are only doing a single show, or perhaps a summer season, saving you even more of your hard-earned dollars.
Veracity Insurance Solutions, LLC specializing in Product Liability, General Liability insurance and the Placement of Programs launched liability insurance for artists and crafters – ACT Insurance Program in 2009. ACTinsPRO offers art show policy (suits for shows) and annual policy that includes inland marine coverage for tangible property (supplies, materials, tents, and computerized equipment) on and off premises, but does not include structural property. Veracity insurance Solutions, LLC has underwriting authority, and the insurer is Great American, an A rated carrier by A.M Best. ACT Program currently works in 50 states and has own website with the easy online process.
In summary, there is no reason to rely on your homeowner’s policy when it probably doesn’t provide the coverage you need when other programs are available at similar, or less expensive premiums. Do a little homework and cover your assets properly.
By Veracity’s Insurance Solutions President & CEO Daryle Stafford.