Thursday, June 26, 2008

Get insured

Insurance is a business issue most PJs want to avoid. It falls somewhere below root canal on a pleasure meter. However, we need it. So, let's understand it.

I've upgraded all kinds of insurance lately, so this information is current. Folks reading this in a few years need to check with their insurance agents.

Basically, insurance is legalized gambling. We're betting something horrible happens. Large corporations are betting it won't. The larger the amount at risk, the more money either side must ante up.

However, there are some caveats. First, almost all the money we pay is a business write off (auto and home are percentages). So, we get to reclaim most of our payments.

Second, there's no measuring the value of peace of mind when something bad could happen. If we have health insurance, we're far more likely to get a wide-angle shot of a gator or snake. Without insurance, it's a 300mm or longer moment.

The same peace of mind applies to where we drive, where we shoot, what equipment we use, where we park, who we invite to our home, etc. Essentially, every "freedom" we tend to enjoy as PJs is covered by some form of insurance. Yes, we can do whatever we want in America, but we are entirely responsible for the repercussions and expenses if something goes wrong.

Considering the PJ profession, it's wise to bet something will go wrong.

Auto liability insurance
In most places, auto insurance is required to operate a vehicle on the road. It's also most PJ's first experience with insurance.

For most staff PJs, it's a non-reimbursed job requirement (no insurance = no job). Some staffers get a monthly car allowance to cover some of the expense, but this has become increasingly rare.

Basic liability is required by state. However, new car loans often require full coverage. This costs quite a bit more, but it means the car will be fixed if it's damaged or replaced if it's totaled or stolen. It can also include provisions for medical expenses of occupants and security of equipment in the vehicle.

These risks become higher or lower depending on the PJ's location. However, auto insurance is already starting to overlap other insurance expenses and might reduce the costs of supplemental premiums (this is good).

Health insurance
Health insurance is often the reason most PJs prefer to be staffers. We know we're covered and can get semi-repaired or if something goes wrong. It allows us to take calculated risks at our job without too much fear.

This doesn't mean PJs with acrophobia won't be screaming like a monkey during a skydiving assignment. But if they shatter on impact, they don't have the additional worry of a $50K hospital stay, loss of income, etc.

For most PJs, this is the single most expensive form of insurance. Staffers have a significant portion paid by their employers, but still have a hefty portion taken out of their income. Meanwhile, freelancers are on the hook for the whole amount or have a beautiful, kind, loving spouse with good insurance paying the premiums for us. ;-}

Homeowner/Renter insurance
By itself, homeowner/renter insurance can be quite expensive. A low-value rental policy can cost more than $100. However, when it's purchased as a bundle with auto insurance it can actually cost less than the auto insurance alone.

It's unbelievable, but I'm living proof. It also means I have a full-service insurance agent, full coverage on two autos, good driving histories, are over a certain age, married, and so forth. But, it's possible to pay less for more insurance. Check with your local insurance agent for the best prices.

If you own the property, you need this insurance and are required by a mortgage contract to have it. Considering what I've photographed in my career, it's a good investment against something tragic.

For PJs, this is a partial write off for the business-use percentage of our home. We write off the same percentage of the insurance. However, it covers much or all of our home-based equipment and archives as well as claims against us if something happens to our home or someone gets injured at our home.

Again, this coverage overlaps into our business insurance needs.

General business liability insurance
When I went freelance, I knew I needed this coverage. If a staff PJ drops a camera on a pro boxer from the catwalk, the paper is on the hook for expenses. If a freelancer does it, it's a life-halting event.

Even something as simple as a person tripping over a wire or a light stand accident can become a career-ender for freelancers without this insurance. Consequently, don't consider mounting cameras and strobes in remotely dangerous locations without proper coverage.

Some cities have ordinances requiring this insurance before photographers are allowed to make images within the city limits - even in public places. While the Constitutionality of these ordinances might be questionable, it would cost more to legally challenge the ordinance than to pay the premium and have some peace of mind.

While this may sound like staffers can skate, they're skating on thin ice. If a staffer takes a freelance gig, it's not covered by the paper. They might try to sneak it in under the radar, but it could cost the staff gig in the long run.

Consequently, it's wise for staffers to purchase this insurance as well if they plan to accept freelance gigs.

Again, when it's bundled with other insurance, it's surprisingly reasonable. For about $30 per month, PJs (staff and/or freelance) could get about $300K liability, $20K business property theft/loss, $5K medical liability, $10K equipment breakdown, attorney's fees and actual losses sustained.

The price goes up as numbers increase, but it's still reasonable when bundled. Again, check with your local agent.

From my point of view, it's probably the best $30 I could spend as a pro PJ. It also makes my service more appealing to other businesses because they know I'm absorbing basic liability. If I'm dumb enough to drop a light stand on a new car, it's covered.

Property insurance
Property insurance covers all our equipment. While it's taken years for us to acquire all the gear we use every day, it can be gone in seconds.

Most gear is covered under auto, homeowner or business insurance, but it can be covered separately as well. Again, freelancers are on the hook for the whole amount of the gear lost if it's not otherwise insured.

Staff PJs normally have their gear covered on a company-wide program. Unless staffers want to replace everything out of pocket, it's critical to routinely update company records with equipment lists and serial numbers.

I keep a spreadsheet of all my equipment and serial numbers. Part of my workflow is to add all new equipment and serial numbers to the spreadsheet before I allow myself to use the equipment once.

Loss of Business insurance
This is catastrophic loss insurance. Wedding PJs in hurricane areas as well as flood and fire zones are most likely to consider this coverage.

This insurance is relatively inexpensive because it's a back-end rider on other policies and is often considered a "last resort" claim. It's also difficult for PJs to claim this insurance because the kinds of disasters that lead to this claim are exactly the kinds of disasters we typically cover.

So, PJs are likely to earn equal or greater income from alternative sources while other businesses lose all income. Traditional (studio) photographers and wedding PJs may want to still consider this option while primarily news PJs aren't as likely to pay this premium.

Errors and Omissions insurance
This is considered "special business insurance" for professionals. It's commonly purchased by technology professionals for protection from data liability (real or alleged).

It's also used by some photographers to guaranty delivery of professional services. Again, wedding PJs are far more likely to need this coverage than primarily news PJs. In a worst-case scenario a wedding PJ snowed into Buffalo might be happy to have this coverage while the nuptial service continues in LA without a photographer.

It won't help with the mother of the bride, but it might help return the PJ fees. I'm not sure if it would cover the bulletproof vest needed afterward. Again, check with your local agent. :-)

Travel insurance
Unless PJs are certain their insurance is universal, it normally stops the second a foot or tire crosses a border or the PJ boards most forms of interstate mass transportation. This is when travel insurance must be in place.

Staff PJs normally have this covered by the company. Be certain the company has plenty of supplemental insurance before pitching the story about guerrillas in the Peruvian Andes or Congo.

Freelance PJs must arrange travel insurance. This is a complete business write off. We'll hope freelancers already have a client before they take off to points unknown. The client pays these expenses as part of the invoice total. If not, the images are part of the freelance PJ's stock portfolio, so it's still a complete business expense.

No matter what, this is very important insurance.

Most frequently, PJs need all-inclusive international business insurance. This covers medical, dental, emergency evacuation, cars, property rentals, liability, trip interruption, cancellations, baggage, property theft, identity theft, loss of business, accidental death and return of body (funeral shipping).

These are sold for single trips or for multiple business trips over the course of a year (typically with total-time restrictions). There is also insurance to cover longer trips (more total or consecutive days), but these have much higher premiums.

Check with your local agent before dealing with an unknown national or international organization.

As with everything in this world, make sure the company has a reputation of delivering when needed. Research, research, research and remember to look for negative information posted on the Web. When your leg shatters in Peru, it's not the time to find out the emergency medical evacuation required pre-approval.

Life insurance
We're all going to die eventually. All PJs have the potential to die before expected.

Life insurance is the biggest gamble of them all. We're betting we'll die (a certain bet). The insurance corporations are betting we'll run out of money or change insurance carriers before it happens.

The most secure is staff PJ life insurance. It's typically paid by the company as part of the terms of employment. The company knows when you die, and human resources will help your family recover what's rightfully theirs.

The next most secure is "whole life" or "permanent life" coverage. Most PJs don't need this. It's far more expensive than term insurance. It's essentially a tax shelter for wealthy individuals. The policy collects interest and pays a tax-free, lump-sum death benefit. If you're already rich, go for it.

Term life insurance is best for most freelance PJs. It gets progressively more expensive as individuals age. Premiums also increase based on the amount of death benefit we request. Some PJs may want to think they're worth millions and millions. Unless they earn it annually - they're not.

Keep premiums reasonable by only purchasing the amount it would take to cover funeral expenses and keep your family as secure as if the PJ was still alive. Unfortunately, this isn't very much, but it's also fortunate because it means the premiums are lower.

It's vital to let the beneficiaries know about term life insurance policies. Term policies expire if they aren't paid - because the payer, you know, died and stuff. So, beneficiaries need to know how to quickly claim their prize. :-)

Final thoughts
Unfortunately, insurance is a bet we really don't want to win. It means something horrible happens to us or our property. For the sake of our business and loved ones, we must win this bet when the time comes. It's their future we're gambling.

Enough for now,

No comments: