Let’s suppose that you’re a sculptor of large public installations.
You are a sole proprietor of your art business and you have general
liability insurance. One day, a child climbs an installation you put up
a year ago in a park, falls off, and gets hurt.
Let’s suppose you are a photographer, and you work on location. You
are also a sole proprietor and have general liability insurance. At one
event, you bring in lighting equipment, and your assistant tapes the
power cords to the floor. The tape doesn’t hold on the ceramic tile
floor, and someone trips on the cord, hurts herself, and brings the
light crashing down on another attendee, injuring him as well.
Finally, let’s say you teach art workshops at a local college. You
are also a sole proprietor and have general liability insurance. You
bring the supplies for class from home for each session. Some of the
liquid cleaning supplies are in mason jars. One student mistakes the jar
for water and swallows turpentine in your class. She is rushed to the
hospital.
Are these artists protected legally? Well, it depends. Is a general
liability policy enough to protect you, or should you form a corporation
or LLC? Let’s see what this insurance generally covers, what sole
proprietors are responsible for, and where they stand legally.
Insurance will protect against accidents…usually, as long as you were
not negligent in allowing the accident to happen. Negligence is what a
reasonably prudent person would have exercised as care. Let’s say you
open the door to your studio and a kid hops in on a pogo stick and
crashes to the floor. You could not have foreseen that, you did not know
he was coming or that he’d trespass and fall. Now, let’s say you asked
him in, after just mopping the floor and waxing it….you get the point, I
hope!
If insurance fails to cover you in a suit, as a sole proprietor, you
will be held personally liable for monetary damages. That means that
everything you own an interest in is up for grabs to satisfy a judgment
– everything. Your house, car, savings, etc can be sold to pay for a
lawsuit. What can you do? Look into forming a LLC or corporation, if you
have any exposure like the above scenarios.
Many artists do not. They paint, sell, repeat. Their paint is safe,
their studio off limits, their sales straight forward. But for the other
half or so who have a lot of public exposure and interaction, work on
location, teach, or use materials that may cause harm, the “corporate
veil” that keeps CEOs of big firms from losing their homes in a lost
suit with large damages can also work for you. It is far better to lose
your art business than your art business, your house, your savings, and
your car.
Talk to an attorney in your state…see what the have to say about your
particular situation. A quick consulting fee is far cheaper than a
nightmare scenario because you failed to look into your exposure. Do it
soon!