Recording and Music Studio Insurance - Get The Facts

Recording studios exist in an industry that remains consistently strong. Regardless of the economic state of the country, there is always a demand for new music.

Owning and operating a recording studio can be a lucrative endeavor, but, just like any business that involves working with the public, it is not without its risks. Fortunately, you can purchase recording studio insurance to protect your investment.

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Recording Studios in America: A Snapshot

There are currently more than 4,700 recording studios in the United States
The state with the highest number of recording studios is California with 931
One in four recording studios in the U.S. has been established in the last five years
Approximately 38% of all recording studios report more than $500,000 in annual sales

What Is Recording Studio Insurance?

Recording studio insurance is a specific type of business insurance policy. It is designed to protect studio owners against third-party lawsuits and loss of business property or assets.

This insurance offers coverage options that are important to recording studio owners, allowing them to build policies that meet their studio’s specific needs.

These policies are not required by law but may be required by financial institutions for those who have taken out business loans or by landlords if the studio is rented. These policies provide necessary coverage for situations that can force your business into bankruptcy.

Recording Studio Insurance Provides Liability Coverage

Liability coverage is the most important component of any recording studio insurance policy. There are many instances in which you might find yourself on the wrong end of a lawsuit.

Even if the case is thrown out for lack of merit or you cleared of all charges, the accrued legal defense fees can be enough to cause your business great financial hardship. Fortunately, studio liability insurance includes coverage for all court costs and legal fees associated with any covered event.

Some examples of liability insurance coverage options that may be of interest to you include:

General liability insurance: This provides coverage is someone is injured or suffers property damage while on your studio property and you are deemed responsible.
Products liability insurance: If your studio sells musical instruments or equipment, this will provide coverage if a customer is injured by a product you sell.
Completed operations liability insurance: This provides coverage for any legal accusations that may occur after you have completed a business transaction. For example, if a customer feels that you did a poor recording, you may be able to settle the problem by simply refunding the money. However, if a customer claims that your mistake caused personal losses and damage, you may be in for a hefty lawsuit.
Damage to rented premises liability insurance: If you rent the building in which your studio is housed, or if you rent a special location for off-site recording purposes, you may be held liable for an damages to the facility. This insurance coverage will provide compensation for any necessary repairs or replacements.
Special event liability insurance: If you host a special event, the venue at which it is held may require you to carry special event liability insurance to cover any possible damages or injuries that occur during the event.
Host liquor liability insurance: If you host recording parties in your studio and serve alcohol, your studio can be held liable for any resulting injuries or property damage if one of the party guests becomes intoxicated. Host liquor liability insurance will shield you from this type of lawsuit. This coverage is also generally included with special event liability insurance.
Commercial auto liability insurance: If your recording studio owns a van or a fleet of vehicles used to transport equipment to off-site recording locations, you will need to insure these vehicles with a commercial vehicle insurance policy that provides liability coverage that meets or exceeds state requirements. If you or your employees use personal vehicles for these tasks, you can purchase non-owned auto insurance coverage to protect your business from liability.
Workers compensation insurance: If one of your employees is injured on the job, you are required to cover any necessary medical costs. Many recording studio insurance policies will include workers compensation insurance.

Recording Studio Insurance Protects Property and Assets

In addition to liability coverage, music studio insurance provides coverage for property and assets. Some coverage options include:

Building and structure insurance: If you own the building in which your recording studio is housed, you will want to be certain that the building structure is adequately covered. Damages caused by fire or severe weather events can leave you with a big bill out of pocket when you don't have insurance coverage to protect your finances. If your studio is in your home, your homeowners insurance company may require you to cover the studio portion of your home with a business insurance policy and may otherwise deny coverage.
Building property insurance: This provides insurance coverage for the property kept inside your studio if it is lost or damaged due to theft, vandalism, fire, or severe weather events. This includes coverage for instruments, microphones, wires, soundboards, and furnishings.
Property off-premises insurance: If you are hired to record music in an off-site location, this coverage will provide compensation for any lost or damaged equipment while you are there. Property off-premises insurance typically includes coverage during transit to and from the off-site location and is usually effective for up to 90 days.
Equipment breakdown insurance: Your recording studio relies on several pieces of equipment, such as microphones, mixing consoles, digital audio workstations and multi-track recorders. If any of these components break down, you may need to halt operations until they are repaired or replaced. Equipment breakdown insurance will provide the coverage needed to get your business up and running as quickly as possible.
Continuation of income insurance: If a covered event forces you to close your recording studio for an extended period of time, this insurance will provides a continuation of income in an amount sufficient to pay your business-related bills and employee salaries. This coverage is typically limited to one year.
Employee dishonesty insurance: This will provide compensation for losses or damages if an employee steals from or sabotages your business.
Signage insurance: Signs outside your building help people locate your business and serve as a form of advertising. Most business insurance policies exclude signs from the building’s structural and contents coverage, so you will need to purchase a signage insurance endorsement if you wish to include them.

What Does Recording Studio Insurance Cost?

Basic recording studio policies start at about $400 a year. The cost of your policy will depend on a few factors, including:

The size of your studio
The location of your studio
Your gross annual revenue
The number of years you have been in business
The amount of coverage purchased
The insurance provider you choose

The only way to know for sure how much you can expect to pay for a music studio insurance policy is to acquire at least three quotes.

Compare Recording Studio Insurance Quotes

Music studio insurance policies come with many options. As a studio owner, you may have questions about different insurance options and need help deciding which are right for your business.

You can turn to a few reputable sources for advise:

Lawyers - These professionals can help you set up your business legally, and can help you understand liability risks. If you already have a lawyer you consult with, ask about what insurance is right for you.
Financial advisors - CPAs and financial planners may already be helping you shape your budget. If so, they have a good idea about how much you're worth and how much coverage you should buy. Make sure to consult with them about insurance.
Insurance agents - If you already have an insurer for other things like home and auto, you can try asking about commercial insurance. Keep in mind that different agents can sell you different kinds of insurance, so you may want to call around to several companies before you choose a policy.
Colleagues - Got friends in this business? If so, talk to them about what kinds of coverage they've purchased for their enterprises.

With some help, you can choose the right policy for your recording studio and get peace of mind.

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