(The following is excerpted from Best Business Practices for Photographers, Second Edition, by Black Star photographer John Harrington.)
I can’t conceive that it would be acceptable to operate a business without some level of business insurance, yet friends and colleagues do it all the time. I just think that’s plain crazy. In fact, you won’t be able to complete assignments that take place in many locations without insurance. You’ll have problems obtaining loans, and the risk of you losing your entire business because of a lawsuit or a catastrophic loss of equipment, other assets, or data is just too great.
Many photographer-specific policies are available that will cover your business. The following sections discuss the primary insurance types.
The most important tools to your business — equipment valued at tens of thousands of dollars — could disappear in an instant. From your trunk, from your shoulders in a bad neighborhood, from checked luggage — it could happen almost anywhere.
Almost everyone knows of someone who’s had a lens get stolen, “walk off,” or just plain disappear. Many people know colleagues who’ve had all their gear stolen. All of these incidents would have been covered by the proper insurance, except for the “just plain disappear.” That one you’ll have a hard time explaining or getting coverage for!
Several years ago, a close friend of mine called me one Sunday from outside of a wire service’s offices in Washington. He’d parked next to a church that was across the street from the office to go in and drop off a roll of film from a quick, routine Sunday morning assignment. When he came out, his car had been broken into, and his bag with both bodies, all his lenses, and the like had been stolen.
He’d had them covered and was only inside for 10 minutes on a Sunday morning. He was devastated because he didn’t have insurance, which meant his considerable talents as a compassionate photojournalist would be put on hold, frozen until he could save up enough money to buy more equipment. For him, this meant odd jobs and such. I asked about insurance, and he’d let it lapse three or four months prior.
In the end, I ended up being his temporary insurance, loaning him the previous generation’s bodies and lenses that I had yet to sell on eBay so he could do what he does best — make great photos and earn back his equipment, returning my equipment as he purchased replacement equipment for his stolen gear.
Limitations of Homeowners Policies
I know of a number of people who carry a homeowners policy and think that their cameras are covered on that. Some homeowners policies can allow for a rider — a schedule of specific items — for professionally used equipment … at an extra cost, of course.
Without that rider, your coverage rarely covers your equipment (the coverage is for hobby cameras, point-and-shoots, and so on, not your work tools), and moreover, they’re covered with depreciation. This means if you paid $500 for a camera three years ago, they’re not going to give you $500; they will amortize that over the life of the camera (say, five years) and just give you the depreciated value of $200.
Although there are numerous other benefits to a professional-level camera insurance policy, one of the regular items in most is “replacement value.” So, if you paid $4,500 for a camera body a year ago, you’ll get replacement cost reimbursement for that, and the same will hold true for lenses (which tend to hold their value longer than bodies these days). Understand, though, that if you paid $4,500 for a camera body, and the actual cost to replace it after price reductions is now $3,800, you’ll get the $3,800, since that is the current replacement value.
Your insurer will usually provide a combination of coverage types for both photo equipment and other equipment necessary for your business. You’ll list the brand and model, along with serial numbers and the insured value. You can choose what you want to insure from among your equipment.
Most major trade associations have some form of photographer-specific insurance, and all plans make it worth the cost of membership just to join so you can get the discounted rates and options available to members. There are numerous reasons to be a member of trade organizations, but if you’re looking for an economic justification, the insurance options alone make it worthwhile.
As you sell equipment, contact them to remove the items, and as you buy new or updated equipment, contacting them to add the items will ensure that if a loss occurs, you are covered.
Although office insurance might seem to only make sense if you have an office in a commercial building (in which case, your lease will require it), operating a business even from your home will benefit from office insurance — not to mention if you maintain a studio space.
Most office insurance coverage is a component of the camera insurance policy, or in some cases it is an optional add-on. It covers your computer equipment, desks, office décor, and in more and more policies, the costs to recover data (a.k.a. business records reconstruction) if you lose data due to a crashed hard drive.
List your equipment (laptops, desks, and so on) by serial number and replacement cost. This allows coverage in the event of equipment loss from lightning, theft, or whatever, since little of your equipment, except a desk or laptop, will be covered by your homeowner’s or renter’s policy.
Some office policies have exclusions (flood, hurricane, tornado, or other acts of God), so make sure you know what you are — and are not — covered for. In many cases, you can add on additional protection for a supplementary — often nominal — fee.
Lastly, make a point of doing a biennial review to ensure that as you buy new equipment or take older equipment offline (disposing of it via sale, donation, and so on), you are not carrying items that are no longer assets of the business. Of course, a better tactic would be to add items (especially major ones) as you acquire them for maximum protection.
One of the often overlooked benefits of your camera/business policy is the liability insurance that is included in almost all policies. Typically, it’s a $1 million policy. We’ve extended that for the work we do to $2 million, which is not a significant additional cost for the peace of mind it brings.
Many organizations are now requiring this type of liability insurance before you can shoot for them or on their property. Liability insurance covers you for most accidents or claims brought against you during a shoot (and usually en route to/from it). So if your light stand crashes into a $200,000 painting in a CEO’s office and damages it, you’re covered. These incidents sometimes occur, and liability coverage will limit your loss.
Tomorrow: Part 2