Legal Landscape:
Business Insurance 101 for Music Teachers, Part 1

Deborah H. How

MTNA Business Digest, Volume 3, Issue 1

October 2023

Insurance is an essential part of running any business. Rather than thinking “I’ll take care of that later,” move insurance coverage to the top of your priority list. Exactly what types of insurance do you need for your studio business? Over the next four issues, Deborah H. How will take a deep look at insurance for music teachers.

Many music teachers assume that their homeowners/renters insurance will cover their home studios and instruments or that they don’t need separate insurance if they drive to their students’ homes or teach exclusively online. Unfortunately, these are generally false assumptions. State Farm, for example, discloses:

“While your homeowners insurance policy might come with liability protection for certain incidents that happen inside your home, it does not extend to homebased, business-related activities. For example, if a customer comes to your home to exchange payment for goods or services and suffers an injury, there may not be coverage under your homeowner’s policy.” (State Farm n.d.)

This series will examine the basics of business insurance for music teachers, including general liability, professional indemnity, and musical instrument coverage. Part 2 will focus on general liability insurance and touch on workers’ compensation for studios/schools who have employees and commercial umbrellas for teachers who carry commercial leases. Part 3 will focus on professional indemnity insurance and address sexual abuse and molestation (SAM) add-on and standalone policies. Part 4 will focus on musical instrument coverage and how it differs from personal property insurance riders.

In addition, this series will discuss the insurance needs of different teaching scenarios, e.g., independent private teachers (home-based and traveling) and itinerant music teachers (employee and independent contractor) and feature short interviews with insurance agencies and companies.

To start this series, let’s begin with a list of broad definitions of the various types of business insurance to be explored:

General Liability

General Liability insurance covers 1) Third-party bodily injury, 2) property damage, and 3) personal injury (libel or slander) (The Hartford n.d.).

• Workers’ Compensation
• Workers’ Compensation insurance is state regulated (check with your state) and covers employees for 1) medical expenses, 2) lost wages, and 3) rehabilitation costs (Nationwide n.d.)

• Commercial Umbrella
• Commercial Umbrella insurance is sometimes required when leasing a commercial space (check with the property manager before you sign the lease) and extends the coverage of a General Liability policy, including 1) legal costs/judgments/settlements, 2) medical bills, 3) damage to other people’s property (Metz 2022).

Professional Indemnity

Professional Indemnity, also known as Professional Liability or Errors & Omissions (E&O) insurance covers 1) legal fees, 2) settlements and judgments, 3) damages due to professional negligence or errors (Insuranks n.d.).

• Sexual Abuse and Molestation (SAM)
• Sometimes called Sexual Molestation Liability (SML), SAM/SML insurance, covers 1) sexual harassment, 2) verbal abuse, 3) assault (Insuranks n.d.).

Musical Instrument Coverage

Musical Instrument Coverage, unlike homeowners/renters insurance, covers 1) professional usage, 2) breakage, 3) damage while traveling or caused by earthquakes/floods (Clarion n.d.).

• Personal Property Insurance Riders/Floaters
• Personal Property Insurance Riders/Floaters are additional endorsements that cover excluded specialty items on homeowner/renters insurance policies, such as musical instruments, and may 1) increase coverage limits, 2) offer more comprehensive coverage, 3) allow for lower or no deductibles (Lee 2021).

Basic knowledge of these different types of business insurance will enable music teachers to make professional decisions and informed choices when reviewing coverage, purchasing policies, meeting with insurance agents, and talking to underwriters.

References

State Farm. n.d. “Options when insuring your home business.” Accessed August 15, 2023. https://www.statefarm.com/simple-insights/small-business/choosing-coverage-to-protect-your-homebased-business  

Hartford. n.d. “Business Insurance.” Accessed August 15, 2023. https://www.thehartford.com/business-insurance  

Nationwide. n.d. “What is workers’ compensation?” Accessed August 15, 2023. https://www.nationwide.com/lc/resources/small-business/articles/what-is-workers-compensation-insurance  

Metz, Jason, and Les Masterson, eds. Forbes, “How To Get Commercial Umbrella Insurance.” Last updated July 8, 2022. https://www.forbes.com/advisor/business-insurance/commercial-umbrella-insurance/  

Insuranks. n.d. “Music Teacher Insurance: Liability, Cost, and Quotes from $20/mo.” Accessed August 15, 2023. https://www.insuranks.com/music-teacher-insurance  

Clarion. n.d. “Keep your Instruments Safe: Clarion vs. Homeowners Insurance.” Accessed August 15, 2023. https://www.clarionins.com/InformationCenterclarion.aspx?id=0  

Lee, Rhonda. Edited by Sarah Silbert. 2021. Business Insider, “What are homeowners insurance endorsements and floaters?” December 2, 2021. https://www.businessinsider.com/personal-finance/homeowners-insurance-endorsements-riders-floaters

Deborah H. How, PhD, MBA is a connection builder/fundraising architect for nonprofit music organizations. She is the owner of Westside Music Conservatory, CEO of Musical Etudes and member of the MTNA Business Resource Network.