"A Career-Threatening Vulnerability"
A recent CERF survey finds that only an estimated 36% of artist-owned buildings are properly insured for business use.
by Doug Wilhelm
A whole lot more craft artists think their businesses are insured than actually are. That’s one key finding of a recent survey of almost 3000 craft artists’ businesses and their insurance coverage, conducted by the Craft Emergency Relief Fund through six national craft organizations. Part of an effort to promote more affordable insurance options for working artists, CERF’s survey dramatically highlights how many are right now at risk.
For example, 76% of all the surveyed artists who own the building where they work believe their homeowners’ insurance covers them in that work-yet only an estimated 36% of artist-owned buildings are properly insured for business use. In sharing the results of its survey, CERF’s goal is to make a difference-not just in raising awareness among artists, but also in equipping arts organizations and insurance providers with the data they need to develop new coverage plans.
“We’re hoping this will assist people who are trying to put plans together, and inspire some organizations to look into this for their members,” says Craig Nutt, a Tennessee furnituremaker who coordinated the survey as CERF’s director of programs.
Artists "Felt Stymied" Seeking Coverage
When artists work from home or from another building on their home property, their homeowners’ insurance usually won’t cover damage that relates to their business, Craig explains. “If you offer things for sale, or you accept money for goods or services, then you’re in business as far as the insurance company is concerned-and that affects your coverage,” Craig says. “It’s possible they could deny a claim on your house, like if you burn it down from something you did in your studio.”
CERF first saw the gap between artists’ perception of their coverage and the realities after conducting a general survey of craft artists in 2004. “People generally seemed to think they were reasonably well-insured,” Craig says.
But CERF also collects date from craft artists who seek help after illness, accidents or disasters-and about seven in 10 of those applicants turned out not to have business insurance. CERF soon began offering educational programs on insurance at art and craft shows and conferences. “What we started hearing back was that people had been trying to get insurance, but either couldn’t get insurance agents to talk to them, or the quotes they got were very high,” Craig recalls. “They felt stymied.
“So I started talking to insurance people about what it would take for organizations to start group plans, to get more appropriate products on the market. They would ask me questions I just couldn’t answer. ‘How large are the businesses? What do they produce? How much does a typical craft business gross?’ So we decided to do some research-find out what craft businesses look like, what the practices are in the field, and what the situation is.”
Survey Finds Vulnerability at all Levels
In 2007, CERF sent its survey to the members of six media-focused craft organizations: the National Council on Education for the Ceramic Arts, the Glass Art Society, The Furniture Society, the Society of North American Goldsmiths, the Artist-Blacksmith’s Association of North America, and the Surface Design Association for textile/fiber artists. Members of those groups were asked to respond if they earned income from their artwork, or planned to soon. The survey took about 20 minutes to complete; an impressive 2921 craft artists responded.
Here are some highlights from those responses:
- 66% of the artists spend more than 20 hours a week doing work that relates to their craft businesses.
- 72% work in their home, an attached structure or a building on their home property. 71% own the building where their studio is located. 63% own other business property valued above $25,000.
- 76% of artists who own the building where they work think their homeowners’ insurance covers the building-but only an estimated 36% actually are covered.
- 69% of all the artists surveyed are not properly insured for business-property losses that are not buildings.
- Artists who work longer hours, own more property, have been in business longer, or have a studio outside their home are more likely to be properly insured. But even among those artists, less than half are properly insured, except for those who own more than $151,000 in business property.
- Cost is the biggest obstacle cited by artists who don’t have business insurance; the second-biggest obstacle is not knowing where to purchase business insurance, along with the complexity of the process. Almost 80% of the artists who responded said they would be likely or very likely to buy a business insurance policy if one was offered by a craft organization to which they belong, possibly at a savings.
Understanding Coverage-and the Need for It
“The lack of adequate business insurance represents a career-threatening financial vulnerability to artists who are affected by emergencies beyond their control, such as fire, theft or natural disasters,” CERF’s survey concludes. “The results of this survey indicate a need to better inform artists of the risks they face, the role of business insurance in mitigating those risks, and how to evaluate and purchase insurance.”
If you don’t have an insurance rider that covers you for professional artwork you do on your home property, Craig Nutt says, then you’re almost surely not covered. If you talk with an insurance agent, you’ll likely be offered a package of options.
“What’s called a business owners’ plan, or BOP, is usually a mix of coverage that starts with liability and bundles in property-tools, machinery, supplies, everything except the building,” Craig says. “It may also be possible to get a rider on your homeowners’ policy that would cover an attached studio, or a studio that’s elsewhere on your home property.
“People come to us when they have emergencies,” he concludes.” We’re hoping that, with our new Studio Protector, the people who come to us will be better prepared; but for the most part, we hear from people after a disaster. And that’s kind of too late to be thinking about insurance.”
CERF thanks Klemm Analysis Group of Washington, D.C., for assisting with data analysis in this report, and the Windgate Charitable Foundation for its generous support of CERF’s research and reporting on artists and home insurance.
Editor’s note: This article appeared in the February 2010 edition of CERFnews and has been reprinted with permission.