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School me a little on llcs and insurance, if you would, please


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Hi, Gang! As my little DJ and sound hobby is slowly growing, I am starting to think seriously about forming an llc or incorporating and procuring insurance for my gear.

 

How many of you have formed companies, llcs, corporations? What made you choose the type of organization you formed?

 

As for insurance, I have found gobs of insurance companies that will cover gear and provide general liability. What kind of insurance do you guys carry for your sound biz? What coverage do you have and in what amounts?

 

I was until recently involved in a local group organizing a three-day dance event scattered throughout several local venues. I wound up being edged out for sound and DJ work because a regional DJ told the group that if they used him for sound gear and subcontracted DJs through him, their whole event would be covered by his 'blanket policy.' I have yet to find a policy like this! Is this guy likely in error about his coverage or is it likely he is right?

 

Thanks for any help.

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How would someone putting on a 3 day event not know he was lying through his teeth?

 

 

Just because you're in charge doesn't mean you're the best persno for the job!

 

The DJ was lying as far as I can tell.

 

I just got a quote for liability insurance for a one day concert that I am helping with. It's in a 350 person soft seater - two hour concert. The quote was just under $150.00 for two million liability for the event - that's the minimum the theatre requires.

 

As to incorporation. Back when I was making real money I seriously thought about it, and investigated quite a bit. Many people advised against me incorporating because of the trouble and money. My father also had an incorporated company (long story) that was also basically just a waste of money and time - YMMV.

 

The big issue for some folks (as it was for me) is the worry about their personal property being attached to a settlement. If that's the case for you, then you should talk to a professional.

 

EDIT - I have two million liability and gear insurance through an independent insurer sanctioned by the American Federation of Musicians - probaably not going to work for you unless you're in the union.

 

EDIT #2 - Just realized I should clarify that I'm responding to the OP (except for the first sentence).

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OK, so lets say you buy your liability insurance by the year. Lets say I am a promoter or the head of Parks and Recreation and I am organizing a multi-venue event. I approach you about supplying sound for several venues and you offer an agreeable price. I then ask you to make my organization an "additional insured" under your liability policy. In order to do this, you pay your insurance company maybe $100 and they issue me a "cert" to cover mishaps caused by you during the time period of the event. City and state organizations will also ask for proof of workers comp (which will cover all of the DJs during the event). When you boil it down, it sounds like "blanket coverage". It sounds like the competition up sold themselves with a standard insurance policy.

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Just had a chat via fb with this dj and the organizers. The other sound/DJ guy seemed rather surprised that his insurance was being touted by the organizers as "blanket coverage for the event" and clarified that his insurance only covered him, his gear, and his contractors. Probably just going to have to shake my head and walk away from these folks, as they also seem to be ignoring everyone's warnings to get their performance rights straightened out.

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If the "local group" isn't incorporated he'd have to add each member individually to the policy. Also the venues. It certainly could be done - I'm just skeptical that this was his intent. Certainly he (and hopefully his workers) would be covered by his existing unmodified policy (assuming he has one).

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OK, so lets say you buy your liability insurance by the year. Lets say I am a promoter or the head of Parks and Recreation and I am organizing a multi-venue event. I approach you about supplying sound for several venues and you offer an agreeable price. I then ask you to make my organization an "additional insured" under your liability policy. In order to do this, you pay your insurance company maybe $100 and they issue me a "cert" to cover mishaps caused by you during the time period of the event. City and state organizations will also ask for proof of workers comp (which will cover all of the DJs during the event). When you boil it down, it sounds like "blanket coverage". It sounds like the competition up sold themselves with a standard insurance policy.

 

 

You have more experience with additional insured for these types of things, but my insurance will do it although they dont really like to.

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What policy do you have?

 

 

Its a general liability, property damage, and auto coverage policy. Although this is for a plumbing and hvac service and repair company where the likelyhood of a claim is probably higher. Our agent is really up front with us and has told us that they will do it, but they dont like to.

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Its a general liability, property damage, and auto coverage policy. Although this is for a plumbing and hvac service and repair company where the likelyhood of a claim is probably higher. Our agent is really up front with us and has told us that they will do it, but they dont like to.

 

 

It sounds like your policy might cover events but if there is alcohol consumed at the event, it is a sticky point for insurers. How many times have you used this policy for events?

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There are basically 2 types of insurance for this kind of setup. The 1st is general liability which protects the venue from any damage you (or you employees) might do. For example if you hire me to cut down a tree in your yard & I drop it on your house, my general liability insurance pays for the damage to your house and any injuries you or your family receives. If you're not satisfied with what my insurance offers, you could sue and if you win I might lose my house/IRA/antique coca cola tray collection to pay the settlement.

The 2nd type of insurance is worker's comp. If you hire me to cut a tree down and it injures me or one of my helpers and I don't have worker's comp, I or my employee *could* sue you for being injured on your property. If I was visiting your property as a friend and got hurt, your homeowner's insurance would likely cover my injury but if you hire me to work on your property and I get hurt your homeowner's insurance will likely tell you you're on your own for hiring uninsured worker(s) and you could be personally liable for the cost of my injuries and lose your house/IRA/antique coca cola tray collection to pay the settlement. (Sux, don't it?)

Where an LLC (Limited Liability Corporation)comes into play is if I have an LLC and drop a tree on your house, my personal property (house/IRA/antique coca cola tray collection) isn't considered assets of the corporation and are protected from judgement/attachment.

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It sounds like your policy might cover events but if there is alcohol consumed at the event, it is a sticky point for insurers. How many times have you used this policy for events?

 

 

I dont use this policy for events. We have customers occasionally that like to be additional insured. Sorry for the confusion as this is a live sound forum and my insurance has nothing to do with live sound lol.

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There are basically 2 types of insurance for this kind of setup. The 1st is general liability which protects the venue from any damage you (or you employees) might do. For example if you hire me to cut down a tree in your yard & I drop it on your house, my general liability insurance pays for the damage to your house and any injuries you or your family receives. If you're not satisfied with what my insurance offers, you could sue and if you win I might lose my house/IRA/antique coca cola tray collection to pay the settlement.

The 2nd type of insurance is worker's comp. If you hire me to cut a tree down and it injures me or one of my helpers and I don't have worker's comp, I or my employee *could* sue you for being injured on your property. If I was visiting your property as a friend and got hurt, your homeowner's insurance would likely cover my injury but if you hire me to work on your property and I get hurt your homeowner's insurance will likely tell you you're on your own for hiring uninsured worker(s) and you could be personally liable for the cost of my injuries and lose your house/IRA/antique coca cola tray collection to pay the settlement. (Sux, don't it?)

Where an LLC (Limited Liability Corporation)comes into play is if I have an LLC and drop a tree on your house, my personal property (house/IRA/antique coca cola tray collection) isn't considered assets of the corporation and are protected from judgement/attachment.

 

 

To add to this a bit, just for information purposes.

 

If this tree guy cuts down the tree and it falls on your house and he isnt insured then you are now relying on your own homeowners policy. And if his worker gets hurt while working on this tree, that is now the homeowners responsibility as well. An employees neighbor is going through this exact thing right now. The neighbor hired some guys (uninsured and probably unlicensed) to clean up fallen trees from some storms we had roll through earlier this year. One of the guys got hurt and is now sueing the homeowner.

 

No matter what you are doing, a music event, having trees cut, landscaping, make sure who you hire is licensed and insured. In my field there are a lot of guys "saving money" by letting their insurance lapse until they get a big job where they need to prove that they have some.

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Hi, Gang! As my little DJ and sound hobby is slowly growing, I am starting to think seriously about forming an llc or incorporating and procuring insurance for my gear.


How many of you have formed companies, llcs, corporations? What made you choose the type of organization you formed?

 

Well...

 

I'd be far less concerned about coverage for your gear than being covered for liability.

 

For one: Unless you need to file a claim for a complete disaster... that would bankrupt you and your children's children to take the loss on you chin, you should absolutely never, ever consider filing a damage or loss claim. Based on my experience in these matters: I'd never consider filing a damage or loss claim for

 

IME: Insurance companies seem to be in the business to collect premiums and pay their operating costs and pay dividends to their stock holders. Paying claims (or paying more than one claim to any one policy holder) does not seem to be in their business plan. And, I'll suggest that you are not the customer of your agent, but rather the agent is the customer of the insurance company. So where's that put you as the premium payer? I'll suggest you're basically just the grease for the skids.

 

Not that all insurance companies are blood sucking leeches that aren't fit to draw another breath... but they are generally business', and all that I've had the arguable pleasure to do business with over the past couple decades seem to be very interested in their bottom line... regardless of your bottom line.

 

I'm of the impression that anyone who can't be self insured... well... insurance companies generally have you right were they want you. The ONE (and only one thing) that it seems an insurance company premium will buy you (IME) is the weight of a good attorney on retainer to an insurance company... which can be really handy to ward off a frivolous liability lawsuit.

 

I'll suggest that if you're shopping for insurance... and unless you are in a position to be self insured... you probably NEED to be if you're in business in any way shape or form in the US... then look for an at least $2M umbrella policy with about a $50K deductible... that you never expect to need to use, and if you do, then the premiums to uncle Gweeto were probably worth it.

 

FWIW: It seems like our business insurance premiums were higher when we were operating as an LLC as opposed to operating as a mom & pop owner/operator.

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Some type of hazard or peril insurance for gear is necessary for a sound company if they want to cross rent major gear. It is necessary to make the supplier of the sub rented gear a "loss payee" on the sound company's policy.

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Update:

 

Chatted with the other DJ and he has been setting the organizers straight on what is insurance does and does not cover. In the end it was the organizers, and not the other DJ that was overstating things and being in error. I fear these organizers are way over their heads but seem resolute in maintaining blissful ignorance. Hopefully, it does not cost them dearly to learn this lesson.

 

For my part, no way in hell I am bringing in any of my gear for these folks now. I'll happily sub for the other DJ, as he is a straight shooter and has helped me in the past with a few things.

 

Thanks, gang.

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Update:


Chatted with the other DJ and he has been setting the organizers straight on what is insurance does and does not cover. In the end it was the organizers, and not the other DJ that was overstating things and being in error. I fear these organizers are way over their heads but seem resolute in maintaining blissful ignorance. Hopefully, it does not cost them dearly to learn this lesson.

 

Humm... where have I heard this before... the part about: "Not to worry (or increase your bid) we're pretty sure it's all insured via either our policy or some other contractor's umbrella policy"... and: "you can write it (your usual fee) all off as a chariatable contribution", and: "there's plenty of power, bands play here all the time", and: "You'll have plenty of help supplied", and: "Well make sure there's plenty of parking for you and your crew and clear access to the stage", and: "There will be some other acts that we don't have advance information for, but they'll be easy... should be no problem" and: "here's my cell phone number, you can reach me anytime", and: "I'm pretty new at this position, and I don't have much experience at this sort of thing, but I'm really enthusastic about this event and there'll be a lot of work here for you in the future if you can cut us a break on this event" and:

 

"The check's in the mail" and: "Hi, I'm from the government and I'm here to help" and: "Would you like to meet my sister? All her friends like her and she's really good with family!!! You look like a nice guy!... that's your truck, right?"

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Humm... where have I heard this before... the part about: "Not to worry (or increase your bid) we're pretty sure it's all insured via either our policy or some other contractor's umbrella policy"... and: "you can write it (your usual fee) all off as a chariatable contribution", and: "there's plenty of power, bands play here all the time", and: "You'll have plenty of help supplied", and: "Well make sure there's plenty of parking for you and your crew and clear access to the stage", and: "There will be some other acts that we don't have advance information for, but they'll be easy... should be no problem" and: "here's my cell phone number, you can reach me anytime", and: "I'm pretty new at this position, and I don't have much experience at this sort of thing, but I'm really enthusastic about this event and there'll be a lot of work here for you in the future if you can cut us a break on this event" and:


"The check's in the mail" and: "Hi, I'm from the government and I'm here to help" and: "Would you like to meet my sister? All her friends like her and she's really good with family!!! You look like a nice guy!... that's your truck, right?"

 

 

Wow, that pretty much constitutes every conversation I've ever had with a promoter. Except the sister part - maybe next gig....

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An LLC prevents a liability claim from reaching your personal assets and is a "disregarded entity" for tax purposes. That means you don't file a separate tax return but continue to file Schedule C on Form 1040 as a Sole Proprietor.

 

In Florida the only continuing cost of the LLC is the annual filing fee. It also allows you to advertise yourself as an entity instead of an individual.

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