Imagine that you want to buy a beautiful set of plates for your grandmother in a porcelain store, knock over an expensive vase with your violin case and it breaks into 1000 pieces. Most people have liability insurance for this – a PRIVATE liability insurance. It covers damages caused by a PRIVATE person.
However, if a company or an employee of a company causes damage during his work, the company is liable. This does not only apply to large corporations, but starts already in the small: with the sole proprietorship or the self-employed gainful employment.
For example, you step on a precious violin during the intermission of your concert, damage CHF 30’000. In this case, your personal liability insurance may refuse to pay the damage because the damage happened during your working hours. And this is where the BUSINESS liability insurance comes into play.
We clarify if you as a musician need a business liability insurance and what you have to pay attention to.
1. When and why do I need public liability insurance as a musician?
All insurers agree on this:
- It is highly recommended to take out a business liability insurance as a self-employed musician – especially for your main occupation. If a musician causes damage during his work, the personal liability insurance can refuse to pay and the musician will be left with a claim for compensation.
- If a musician works only as an employee, he is covered by the employer’s business liability insurance – if the employer has one. It is worthwhile to clarify this briefly in each case.
- From a purely legal point of view, however, a self-employed musician is not obliged to take out business liability insurance.
2a: If I do NOT take out public liability insurance and damage a fellow musician’s instrument during a concert, will my personal liability insurance pay?
A general answer is not possible. In personal liability insurance, a part-time job is usually also insured up to a certain income limit. Likewise, certain professional liability risks can be included in the personal liability insurance of various competitors. In the described example of damage, the coverage depends on the specific circumstances, i.e. how the damage occurred. Self-employed sideline activities in Switzerland and the Principality of Liechtenstein are covered by private liability insurance, provided that the total annual gross income does not exceed CHF 10,000
The question arises as to where insurance cover is available for the activity as a musician. For example, if you play free of charge in your free time, you are covered by your personal liability insurance. In private liability insurance, AXA sets a gross annual income with a maximum limit of CHF 12,000. If a self-employed person earns an annual income above this maximum limit, there is no coverage under the private liability insurance. In this case, a business liability insurance is required.
The personal liability insurance only covers such damage if the musician has performed as a private person or as part of an insured sideline activity. Whether and to what extent the insurance protection extends to the sideline activity can be seen from the insurance contract.
A professionally self-employed musician is insured through the basic coverage of a private liability insurance, provided that this professional activity does not exceed an annual turnover of CHF 20’000. In the case of a claim, it must be possible for the insured person to prove the effective annual turnover, for example on the basis of the tax return.
In principle, private liability does not pay for these damages if no corresponding additional cover has been taken out. Generali’s personal liability insurance includes musicians as part of the basic coverage, provided that the annual turnover does not exceed CHF 25,000. Thus, within this framework, Generali would cover the damaged instrument of the fellow musician with the private liability insurance.
There is a difference between a full-time or part-time musician. A personal liability insurance protects the insured person against liability claims in private life. In the case of a musician in a sideline capacity, Zurich protects up to a maximum gross annual income of CHF 6000. For higher incomes, a supplement to the personal liability insurance can be taken out. However, here too, the condition that the musician has a secondary profession applies. Therefore, a full-time or self-employed musician is not covered by the personal liability insurance.
2b: Is there a difference for musicians who are self-employed in their main or second job?
Yes, there is no insurance cover for the full-time occupation in the personal liability insurance. In the case of part-time work, insurance protection in personal liability insurance is available from individual companies (sometimes to a limited extent).
In personal liability insurance, it does not matter whether it is a main or a secondary occupation. The maximum annual turnover of CHF 20,000 is decisive. Up to this annual turnover, the customer is basically free to choose whether to take out private liability insurance or public liability insurance. If the annual turnover is higher than CHF 20’000, the business liability insurance is applicable.
3. What risks are covered by business liability insurance?
The insurance cover includes investment, operational, product and environmental risks. We insure the legal liability of the insured party arising from the insured risk listed in the policy for personal injury and property damage as well as consequential financial losses resulting from personal injury or property damage. The benefit consists of compensation for justified claims of third parties and defense against unjustified claims.
Insured is the risk of having to pay compensation for personal injury or damage to property. Co-insured is always also the handling of the damage, i.e. clarification and examination of the claim as well as the payment of justified claims and the rejection of unjustified or excessive claims.
The object of the business liability insurance is to examine liability claims asserted against the insured persons, to indemnify justified claims and to ward off unjustified claims. The insurance cover includes in particular the legal liability for personal injury or property damage resulting from the ownership or possession of land, buildings, premises and facilities (investment risk), from operational processes (operational risk) and from the manufacture or sale of products (product risk). In addition, the insurance cover can be extended to various additional covers (e.g. tenant damages), depending on the customer’s needs.
We insure the legal liability from the business specified in the policy (including all branches and business premises throughout Switzerland and the Principality of Liechtenstein) for personal injury (i.e. killing, injury or other damage to the health of persons), for property damage (i.e. destruction, damage or loss of property; property damage in the sense of impairment of substance), for animal damage (i.e. killing, injury or other damage to health as well as loss of animals. Damage to animals is equivalent to damage to property). as well as for financial losses, if these are due to an insured personal injury or to an insured property damage caused to the injured party. The insurance cover refers to the activities mentioned in the policy.
The business liability insurance covers financial claims that are made against your company due to legal liability regulations. The insurance also covers expertise, lawyer or court costs. This can be the case for various reasons. Especially for musicians and bands, damage as a tenant for the rehearsal room and from the company, e.g. during a concert, are to be highlighted as risks.
The three risk categories of a business liability insurance policy are investment risk, business risk, and product risk. The main risk of a musician is the “occupational risk”, called business risk.
Business risk is the risk of becoming liable for work and other benefits in connection with the insured activity. Example: During the show, the microphone stand falls out of the musician’s hands and injures a spectator.
Investment risk is defined as the risk of becoming liable as owner, possessor, tenant or lessee of land, buildings, premises and installations. Example: In the musician’s recording studio a customer/guest slips on a poorly fixed carpet and injures himself.
Product risk is the risk of becoming liable from the development, production or sale of items. Example: A piano manufactured by the musician collapses and injures the piano player.
4. Wie hoch ist der Selbstbehalt?
5. What is the amount of damage I can insure?
6. Is there a grace period after signing the contract?
With none of the inquired insurances there is a waiting period.
The insurance cover begins on the date stated in the policy or contract.
Important: Damages caused before the beginning of the insurance are ONLY insured if the insured had NO knowledge of the damage at the time of the conclusion of the contract and is able to prove this credibly.
7. Is there a minimum term of the contract?
A contract is usually concluded for five years. An annual right of termination can be agreed, whereby the contract can be terminated by either party at the end of each insurance year. In this case the period of notice is three months.
8a. What is the standard duration of the contract?
8b. Is an annual right of termination an automatic part of a standard contract or must this be explicitly requested?
With none of the requested insurances, the annual right of termination is an automatic component of each contract, but can be included in all of them upon request.
Therefore: Please ask!
9. Does the contract renew itself? What are the notice periods?
All insurers regulate this question in the same way:
The contract is tacitly renewed for a further year after expiry of the contract unless it has been terminated in writing. The cancellation period is 3 months.
10. What do I have to pay special attention to?
It is important to clarify whether the musician is professionally or privately active. If the musician is professionally active, it must also be clarified whether he or she is self-employed or employed (an employee may already benefit from a business liability insurance policy taken out by the employer).
Liability insurance does not normally cover damage to items that are taken over, rented or leased (including musical instruments). We recommend insuring such musical instruments directly against damage.
If the band or musician organizes a concert himself and is therefore also the organizer of the event, he recommends to take out an event liability insurance, because the public liability insurance does not cover all risks depending on the extent of the event.
It is important to indicate the exact scope of the professional activity. This way there will be no discussions in case of a claim. For example, a sideline job if the musician makes instruments, has a store or acts as a concert promoter.
11. If you could recommend two additional types of insurance, which would you strongly recommend to a self-employed musician? And what would be nice to have?
For musical instruments, it is recommended to conclude the coverage “Valuables and special objects”. This is a supplement to the household insurance and covers not only the classic risks (theft, fire, etc.) but also damages caused by unforeseen and sudden damage and destruction due to external impact as well as loss and misplacement (AllRisk).
Rhe All-Risk.Insurance recently introduced by Basler offers comprehensive insurance protection for damage to the musician’s own property. It may also be possible to take out an object insurance policy.
For the insurance of musical instruments we recommend a valuables insurance. Each instrument is insured individually. The scope of coverage is very comprehensive. In addition to the “classic” risks, such as fire and theft, damage and destruction of the instrument are also insured. Loss, misplacement or loss can be included as additional insurance. As in private liability insurance, a maximum annual turnover of CHF 20’000.
We also recommend that you extend the coverage for processing and custodial damage: For damage to entrusted, rented, leased items as well as to other movable property of third parties, to or with whom the independent musician directly exercises an activity. For example, if a musician drops a borrowed instrument on the floor, any resulting damage to property is insured under the processing and custody damage cover.
Company inventory insurance.
Guitars, keyboards, amplifiers, loudspeakers, mixing desks etc. – a band or musician cannot work without a music inventory. And if you have to replace it due to damage, it quickly becomes very expensive. With the company inventory insurance you protect yourself from the high cost consequences.
Accident and loss of earnings insurance
Accidents and illness can affect everyone. Even your band members and you as a musician yourself are dependent on support in such strokes of fate: Generali’s accident and loss of earnings insurance includes comprehensive social security. In addition, Care Management provides support so that a return to the day-to-day life of a musician is possible again soon.