Introduction
It is important that you take care to avoid damage or injury to people and property when operating a business. Most creative activity occurs without incident. However, accidents do happen and sometimes you may be legally responsible for compensating someone for an injury he/she suffered. For example, a customer could slip and fall in your gallery, a volunteer may be injured while helping you cast a mould, an employee or contractor may be injured while using a piece of your equipment. A valuable artwork could be stolen from your studio. Accordingly, you should be prepared in the event of an accident by taking liability insurance.
What is liability?
Liability is your legal responsibility, duty, or obligation to compensate a person for the harm you have caused by breaching your legal duties to that person:
- Duty of Care: the law requires you to take reasonable care to avoid hurting or damaging a person or their property when your actions (or inaction) are likely to affect them.
- Breach of duty: if what you do (or fail to do) causes harm to a person whom you owed a duty of care, you may be legally responsible or liable.
- Consequences: if a court finds that you have done the wrong thing and are responsible for the harm caused, you may have to pay money to the injured person or for the damaged property. The court will look at what precautions you took to prevent harm to the person to whom you owed a duty of care.
Responsibility of tenants or licensees
The owner of a property is ultimately responsible for maintenance of the property. As a tenant or licensee occupying property, for example under a lease for an arts studio, you may still be responsible for injuries occurring on the rented or licensed premises.
How to safeguard yourself
Identify risks
You need to identify the risks involved in your project. You should think about the possible situations where a person could be injured or property could be damaged, even if they seem unlikely to occur. Below are some questions to consider when identifying risks:
- Will members of the public visit your project space? If so, what are the risks of visitors getting injured (eg. tripping over cabling, falling down a step)?
- Is any valuable item stored in your project space(eg. artwork, equipment)? Will any employee, volunteer or contractor be assisting you? Will their work involve any risk of getting hurt?
- Will you sell products? If so, do any of these products carry the risk of malfunctioning or hurting the purchaser?
Minimise or avoid risks
Once you have identified the risks involved in your project, you must plan how to avoid or minimise the risks. This could include:
- warning signs, for example by labelling dangerous equipment or poisonous substances with a clear warning;
- waivers or release forms. For example, if you run a workshop you could get the participants to sign a release form discharging you from liability in case of injury or accident. Waivers, however, cannot exonerate you from liability in all situations. For example, they are ineffective if the law imposes a strict liability on you in for certain damages;
- security measures (eg. alarms, smoke detectors, sprinklers);
- training, including occupational, health and safety training for you and your employees, contractors, and/or volunteers; and
- insurance, such as public liability, property, workers compensation, to protect you against the risk.
Insurance basics
When you get insurance, you enter into an agreement (insurance policy) under which you pay a sum of money (premium) against the insurer’s undertaking that the insurer will compensate a third party for harm or damage you might cause to that person or his/her property.
The following types of insurance might be relevant in relation to you:
- Public liability insurancecovers damage caused to a person or his/her property, but does not usually cover employees or volunteers. For example, if a visitor slips and is injured in your gallery, public liability insurance would cover any resulting damage suffered by the visitor.
You should take out public liability insurance to cover any damage to people or property occurring in the space you occupy unless you are insured under someone else’s public liability insurance. Accordingly, it is essential that you ascertain to which extent, if any, you are covered under someone else’s public liability insurance, for example the organiser of an arts fair in which you participate, and take out your own public liability insurance to cover any gap in protection in relation to your activity.
- Product liability insurancecovers damage caused to people or property by faulty products. In Australia, there is strict liability for damages caused by defective products. This means that a person suffering injury or property damages from a defective product may recover damages from a manufacturer without having to prove intention or negligence on the part of the manufacturer. The term "manufacturer" is understood broadly, and includes importers of foreign products as well as people involved in the manufacturing process. Accordingly, product liability insurance is particularly important to obtain if your activity involves the selling of any merchandise that could cause injury to consumers. For example, crafts might contain dye or paint that could cause a person to become sick, or a lamp you manufacture could pose a fire hazard;
- Workers compensation insurancecovers harm to an employee injured at work. Under the Workers Compensation Act 1987 (NSW), workers compensation insuranceis compulsory to protect against compensation claims for workplace injuries where you pay more than $7,500 in total wages (i.e. cumulatively among all employees, not per employee,including overtime, leave payments, super etc) in a financial year,employ an apprentice or trainee or in other specific circumstances. Visit WorkCover NSW (www.workcover.nsw.gov.au) or contact the WorkCover Assistance Service on 13 10 50 (NSW only) for further information on workers compensation;
- Professional indemnity insurancecovers damage caused to a person as a result of one’s professional activity. For example, a person relies on the professional opinion you express in an article and suffers damage because the opinion was incorrect;
- Property (building and contents) insurancecovers the replacement and repair of things in the insured property. You should obtain contents insurance to protect goods and equipment in your premises from damage or theft;
- Transit insurancecovers the replacement and repair of the insured item, for example art equipment stolen, destroyed or damaged during delivery or on loan;
- Volunteer insurancecovers damage suffered by a volunteer in the course of his/her activity for you;
- Other insurance: you may consider taking out other insurance policies (eg. general business insurance), or you may otherwise be required to take out other insurance policies by law. Contact Arts Law or consult The Arts Insurance Handbook published by Arts Law or your solicitor or insurance broker for more information on what insurance you need. Further, the National Association for the Visual Arts (NAVA) provides advice on insurance for visual artists and craftspeople.
Tips for buying insurance
In some cases, group insurance may be available and a cheaper option for you. For example:
- Ausdance provides a members-only public and product liability and professional indemnity insurance package for dance teachers, dancers and dance companies;
- Duck for Cover provides members-only public liability insurance for performance based artists;
- Artworkers provides members with public and product liability insurance and limited cover for teaching and workshops;
- Local Community Insurance provides insurance to clubs and community groups;
- Regional Arts NSW provides public liability insurance and volunteer insurance cover for incorporated entities in New South Wales, provided the entity is an affiliate of Regional Arts NSW;
- Regional Arts Victoria provides public liability insurance cover for arts groups and individual artists. Although the organisation focuses on Victorian artists, its insurance policy is available to artists throughout Australia.
