Insurance 101 for Choruses
What’s the best way to identify your chorus’s insurance needs and find affordable options to cover them? Choral leaders who have gone through the process share what they have learned.
When the Tennessee River flooded Huntsville, Alabama, during a massive rain 18 years ago, there was so much water in the offices of the Huntsville Community Chorus Association (HCCA) that no one was sure whether it came from the ground or the roof. According to current board member Sally Priester, “we didn’t quite know where to begin.” HCCA had minimal property insurance that covered replacement of furniture and flooring, but not the two cabinets of music that were destroyed. After that event they updated their insurance policies, and following an organizational expansion this year they are re-inventorying their music library to insure it closer to its value. Priester says “we have always been very cautious about the nuts and bolts of the business end” of the choir’s operations.
How do you connect those nuts and bolts to assemble the right insurance for your chorus? Insurance for choral organizations can be bewildering, and paying premiums sometimes feels like an expensive tradeoff for money that could be spent on your music and mission. But property damage, workers compensation claims, and weather cancellations can threaten the financial well-being and even existence of your organization. Paying out of pocket for serious property damage or injury could bankrupt a chorus, and an organization can also get in legal trouble for not having state-mandated coverage.
While insurance can at first be overwhelming, “you can't just let it go,” says Justin Fyala, executive director of the Gay Men’s Chorus of Washington DC. “It'll come back to haunt you.” What began for him as an intensive self-education project in a previous job has developed into deep interest in insurance for choruses. “It’s so important to understand it a little instead of just pushing it aside,” he says. “The bottom line,” says Fyala, is to “make sure you have at least the minimum coverage required by your region while making sure the policy coverages work with your organization’s size and scope.”
It’s a good practice to re-evaluate your chorus’s insurance once a year, says Bob Middleton, director and owner of the Arts Insurance Program, which specifically works with performing arts organizations. (The Arts Insurance Program is partnering with Chorus America on a new affinity insurance program for members.) A review would also be wise if you think you’re paying too much in premiums or are worried that you don’t have enough coverage. According to Middleton, who has more than 30 years of experience in the insurance industry, “probably 50 percent of the companies out there do not have the proper insurance in place.”
A Range of Coverage
The insurance needs of a choir vary widely with the size and complexity of the organization. Consider the experiences and policies of The Capital Hearings, a small, volunteer-led organization based in Washington DC vs. the Los Angeles Master Chorale, a large, professional chorus.
As a condition for receiving grants, the DC Commission for the Arts required The Capital Hearings to have liability insurance, and so did some of the group’s venues. Since the a cappella ensemble has a smaller budget of under $50,000 and no paid staff, it opted for only a general liability policy.
Through the Alliance of Nonprofits for Insurance website, ensemble founder (and lawyer) Dileep Srihari was connected with a local agent offering a package that includes some miscellaneous coverages relevant to fundraising events, such as full liquor liability. Srihari found the alliance’s package to be well-tailored to nonprofits. The $1,100 premium was double what some better-known carriers had quoted, he says, “but there is some peace of mind in knowing that we're not likely to run into situations that aren't covered.”
A much larger organization, the Los Angeles Master Chorale (LAMC) has 18 staff members, a board of 20, and pays all its singers union-scale wages. LAMC issues about 300 W-2’s each year to its employee base. According to CFO Steven Neiffer, its insurance includes “pretty much the full suite of things”: workers compensation, general liability, umbrella, directors and officers bundled with employment practices, and property insurance. LAMC also has coverages for cyber liability, business interruption, abuse and molestation, and hired and non-owned automobiles. (See below for details on these types of insurance.) The organization’s total annual insurance premiums are about $50,000.
Starting Your Search
Getting the right insurance is a two-step process. For one thing, you need to find an agent who understands the needs of choral organizations and knows the insurance products that can be tailored to meet them. In a previous life Neiffer was in the commercial insurance business, but even he thinks it’s essential to find an insurance broker. “You don't do this on your own,” he says. A broker who has experience with choral organizations will have guidelines for coverage levels and know the risks your work represents.
Unfortunately, choruses are not always well served by the insurance industry at large. Bob Middleton founded the Arts Insurance Program to meet the insurance needs of performing arts organizations. “The performing arts in general are only supported by five or six insurance companies that actually have programs for them,” says Middleton, “and within that culture itself, choirs are not really discussed.”
How do you find an agent who understands insurance for choirs? Middleton suggests talking to peer organizations—both locally and nationally, since your insurance agent does not have to be local—and getting recommendations. That’s what Craig Coogan, executive director of the Boston Gay Men’s Chorus, did several years ago when he began a review of the ensemble’s insurance. “We asked other local arts organizations, LGBT organizations, and general nonprofits for recommendations.” Coogan felt that the agent and company he chose had a good understanding of the needs of nonprofits. “There was certainly some education about our specific business,” he says, “but they learned quickly and in fact came up with some product recommendations that worked really well for us.”
Types of Insurance
Then comes Step Two: Before you get down to business with your agent, familiarize yourself with the types of insurance available and choose the ones that apply to your chorus. There are four main policy types and many other coverages that you may want to add for a customized insurance profile.
1. Commercial General Liability
According to the Nonprofits Insurance Alliance, commercial general liability is the “core” coverage that every nonprofit should carry. It covers property damage or injury to a person on the organization’s watch. Many performing venues require $1,000,000 in liability coverage from organizations using their space. When you name the venue as an “additional insured” under the policy, your insurance company should supply a certificate of insurance that you can provide to the venue.
The Gay Men’s Chorus of Washington DC recently used its liability insurance when a member hit his head backstage and needed physical therapy. The insurance company quickly handled the claim. Fyala feels the hassle and expense would have been much greater if the chorus had been directly responsible for the full cost. “Having insurance not only gives you peace of mind,” he says, “it gives your singers peace of mind that if something does happen, they know that they can come to you.”
2. Directors and Officers; Employment Practices Liability
Directors and officers insurance (D&O) protects the personal assets of board members and designated employees from lawsuits related to their work for the organization. Without D&O insurance, if a creditor sued for financial mismanagement or a former employee brought a suit for breaking employment laws, your board members’ personal assets could be at stake. Middleton jokes that a choir usually does not add a D&O policy until an attorney joins the board and asks, “Where’s the coverage?” If you have a board, he says, you should have D&O insurance.
D&O can be combined with employment practices liability (EPL), which covers claims made by employees for hiring and firing practices, discrimination, and harassment. It protects the organization from claims that it’s not following the polices laid out in the employee handbook.
3. Workers Compensation
If you have employees or independent contractors, you must have workers compensation insurance, which covers medical expenses and lost wages for employees who are injured on the job. It can be one of the thorniest areas of insurance for choruses because of the way performers’ work is commonly classified. Most states group choral singers and conductors with ballet dancers and Broadway actors, whose work can involve vigorous movement, props, and pyrotechnics. Because of that, performers in this category are often considered too great a risk to receive standard coverage. Instead, they end up in the “assigned risk” pool, eligible only for state-sponsored coverage that is limited and very expensive.
The good news for choruses is that there are insurance companies that will work with them to provide conventional and affordable workers compensation insurance, but, according to Middleton, “unless you are an agency that specializes in the performing arts, you're probably not even aware of which carriers will do this.” That’s why it’s so important to have an agent who has experience working with choral organizations.
In your personal life, you probably have homeowners or renters insurance. If your chorus owns property, you want similar protection. Commercial property insurance covers business property like furniture, supplies, and equipment, and also covers your building if you own it. It pays to repair or replace items that are stolen or damaged in a fire or natural disaster.
An important consideration when shopping for property insurance is whether to insure your property for its actual cash value or its replacement value. If your well-used risers get broken and new ones cost $10,000, but the depreciated value of yours is $4,000, you won’t be able to replace them with an insurance payout for actual cash value.
If your chorus has specific needs you would like your policies to cover, you may be relieved to know that most of the additional coverages below are relatively low-cost at $500-$1,000 per $1 million of coverage.
Umbrella insurance: Umbrella insurance provides a higher monetary limit of liability coverage. Most general liability policies provide $1,000,000 of coverage, so if you perform at a venue that requires $5,000,000 of insurance, you’ll need an umbrella policy that would kick in if you had any claims over $1,000,000. If your organization is large, with many assets, you may also want the additional coverage that an umbrella policy provides.
Auto insurance: If your organization owns a vehicle, you’ll need commercial auto insurance, which allows unspecified drivers and has higher limits on liability coverage than a personal auto policy--$500,000 or even $1,000,000 per accident, compared to $300,000 for a typical personal policy. The premium cost is similar to that of a personal policy.
If you rent vehicles to transport people or equipment, you can add a non-owned and hired automobile policy to your general liability. It provides liability and damage insurance and is generally much less expensive than purchasing insurance through the rental company. If you both own and rent vehicles, you can add non-owned and hired coverage to your commercial auto policy.
Inland marine: Originally developed to cover goods coming off ships and being transported to markets, inland marine covers portable equipment such as risers, music, and recording equipment when they’re being transported or used off-site. It is usually attached to a property policy, and can also be written to cover rented or borrowed equipment like instruments or costumes.
Valuable papers: You may have some coverage for music and other valuable papers under your property insurance, but it is likely quite limited and might not cover the full cost of replacing your library. A valuable papers endorsement could help fill the gap.
Business interruption: Usually attached to property insurance, business interruption (also called business income interruption) insurance covers expenses and lost income due to a weather event or other disaster. Typical business interruption insurance covers operations only for the building you’re based in. If you perform in other venues, you’ll need dependent business interruption insurance because you’re dependent on another building for your performances.
The cost of business interruption insurance depends on your exposure and how much money you want to insure against. When considering it, think about what would happen if your venue burned down the night before your biggest concert of the year, Middleton says. “We had a client who had a business interruption claim last year over $6 million, and it was huge, but if they didn't get that money, it would have impacted them in an incredible way.”
Abuse and molestation: An amendment to general liability insurance, abuse and molestation (also called improper sexual conduct and physical abuse liability) covers the organization in the event of allegations of abuse. The Nonprofit Insurance Alliance recommends that any organization working with “youth, developmentally disabled individuals of any age, or senior citizens” consider this coverage, and children and youth choruses, schools, and other programs where adults are working with children may be required to have it.
Volunteer accident: Volunteer accident insurance provides medical coverage for volunteers injured while engaged in chorus activities. It is included in most comprehensive general liability policies; make sure it’s included in yours so that your volunteers (including volunteer singers) are covered.
Student accident: Similar to volunteer accident, student accident insurance covers students if your organization operates educational programs.
Cyber liability: According to Middleton, cyber liability insurance is becoming more popular because of the hacking, phishing, and computer intrusion that are almost daily occurrences in the performing arts. It covers business interruption, data loss, and liability for lawsuits (for example, if patrons’ personal data is stolen).
Neiffer cautions choruses to carefully read the contract of any third-party service they’re using to sell tickets or take donations online. In most cases the contract will stipulate “that any cyber crimes that happen with regard to transactions with your customer base are your responsibility.” He says anyone in that position should consider a cyber liability policy.
Crime: A Crime policy is often added to a property policy with a low limit, say $10,000, for crimes such as employee dishonesty, fraud, and kidnapping or extortion. It can be written to have a higher limit or even be a standalone policy that lets your organization choose which types of crimes to cover.
Terrorism: Thanks to the federal government’s loss-sharing Terrorism Risk Insurance Program, most insurance companies include terrorism in all policies, including general liability, workers compensation, and property. You would need a separate terrorism policy only if you have a unique exposure, such as performing on the National Mall for the 4th of July.
Errors and omissions: Usually purchased for a premiere performance of a new musical work, errors and omissions coverage insures the piece against copyright trademark infringement claims. While it’s expensive–usually $2,000-$6,000, according to Middleton–it would protect your organization if it were sued for using someone else’s material.
Event insurance: Purchased for a specific date, event insurance covers a special occasion such as a street festival or fundraiser that is not part of your normal performance operations. Event insurance can include a higher limit than your general liability policy, and claims against it will not go against your general liability policy or affect that premium.
International travel: Purchased for the dates of a foreign performance or tour, an international travel policy provides liability and medical coverage for your volunteers and employees. Since most domestic workers compensation and liability policies do not apply overseas, it is essential to protect your personnel and organization.
Putting it all Together
Once you’ve armed yourself with knowledge and found a good broker, you’re ready to collaborate with the broker on crafting your insurance coverages. Says Fyala, “you want to go in with a general idea of the policies that you're interested in, and then you can tweak the policies with their advice.” Working with the Center for Nonprofit Advancement, a group-share organization, saved the Gay Men’s Chorus of Washington $4,000 a year on its workers compensation policy alone, he says.
Neiffer acknowledges that nobody likes to pay for insurance. As another way to reduce costs, he recommends asking your agent about bundling different policies (e.g., liability, D&O, and property) with one insurance company, which may reduce your premiums, but with the caveat to “make sure that the coverage is going to give a million dollars for each one of those things, rather than a million dollars total for all” the policies in your bundle.
“It seems like it's a wasted cost if you go through a whole year and nothing happens,” he says. “But you know, it's there for peace of mind and that time when something bad happens. It's an investment in your fiduciary and financial safety.” By establishing that security, your chorus can focus on your members and the music.
Kathryn Mueller is a writer and GRAMMY-nominated soprano. She has sung with Seraphic Fire, the Santa Fe Desert Chorale, and True Concord, and lives in Raleigh, North Carolina with her choral conductor husband, two small children, and geriatric dog.