CLASSIFYING RISK
By Linda D. Ferguson, CPCU
Coverage for musicians depends on their venues
There is no classification in the ISO manual for musicians ... but a review of the manual can help determine the appropriate classification for musicians and other entertainers.
What musical group has had the most number one hits?
According to the 2002 documentary "Standing in the Shadows of Motown," the group is called the Funk Brothers. These men developed the Motown sound that is so identifiable when listening to the Supremes, Temptations and so many other groups from the '60s and '70s. The Funk Brothers were session musicians under exclusive contract to Motown. As I watched the movie and heard of their exploits in and out of the sessions, I started to wonder: How are musicians classified and rated?
There is no classification in the ISO Classifications manual for musicians. This necessitates a review of the manual in order to determine the appropriate classification for musicians and other entertainers.
Since Motown was a recording studio in Detroit, the search starts there. There is a classification for Recording Studios and the code is 47103. This classification is based on area, with the only extra charge being for motion picture studios. This means that all activities in the recording studio are included in the classification.
If the musicians leave the studio and perform (the Funk Brothers went on an extended tour of 32 performances), the Recording Studio classification no longer applies because performing outside the studio is not included in contemplated operations.
There are two possibilities for classifying musicians performing outside the studio--code 43215 (Entertainment Performed on Others' Premises) and code 99718 (Theatrical Companies-Traveling.)
The Entertainment Performed on Others' Premises classification is done on a per-show basis and is available for all types of entertainers, including musicians. However, the footnotes state that this classification is for entertainment that is provided for private occasions only, such as weddings or birthday parties, but not situations that include the general public. The footnotes say to try out Theatrical Companies-Traveling.
The Theatrical Companies-Traveling code is based on payroll and would work for most touring musicians. In the case of the Funk Brothers, Motown would have been the insured with the Funk Brothers being employees of the company.
Contracts would need to be studied to determine the exact relationship between the tour group and the musician in order to develop the exact liabilities involved. If the musicians are operating as subcontractors, they would need their own insurance; if they are employees of the tour group, they would fall under the tour group policy. In addition, each tour venue will also have contracts that must be studied to determine the extent of liability that must be assumed by the visiting entertainers and what liability is kept by the venue. Don't forget about any contract that may be in place with any of the middlemen who help to arrange for and book entertainers.
After Motown moved to California, the Funk Brothers were disbanded. Some went to California while others stayed in Detroit. Each developed new ways to earn money. Some played clubs while others offered lessons to supplement their income and pass on their knowledge. The club musicians could be covered under the club's policy or as Theatrical Companies-Traveling 99718. What about the ones who gave lessons?
Some musicians may work directly with a music store. If they do, they would come under the Music Stores classification of Musical Instrument Stores 15538. This classification applies to any music store whose primary operation is the sale or rental of musical instruments. They are permitted to have incidental sales of sheet music and accessories and incidental offerings of music lessons. ISO does not define "incidental," so at what point the music lessons offerings can no longer be included will vary by company. The classification is based on gross sales and the gross sales are to include any fees that are received from any part of the operation, so the fees from music lessons would be included.
If the music lessons are more than incidental, the appropriate classification is Schools-Other than Not-For-Profit 67512.
The individual musicians may just offer lessons in their home. Since this is a business, the coverage is excluded from the ISO Homeowners policy. However, the Permitted Incidental Occupancies (Residence Premises) Endorsement HO 04 42 can be added, with an appropriate charge made for the additional liability exposure. If the insured has homeowners coverage only, an inland marine floater should be pursued to cover any musical instruments in the home, especially if they are taken off site for paying gigs. *
The author
Linda D. Ferguson, CPCU, has 30 years of underwriting experience with national commercial lines carriers. She is vice president of Technical and Educational Products at The Rough Notes Company, Inc.