Creative enterprise hubs in NSW: Liability and Insurance
This information sheet addresses issue of liability and explains how organisations and individuals can protect themselves against risk.
This information sheet is part of a suite of documents prepared by Arts Law.
In this information sheet:
- What is liability?
- How to safeguard yourself
- Insurance basics
- Public liability insurance
- Additional insurance for the Administering Body
- Additional insurance for Program Participants
- Tips for buying insurance
- Further Information
- Useful resources:
As with any business venture, it is important that you take care to avoid damage or injury to people and property when operating a business. This applies to the Administering Body as well as to participants in a Creative Enterprises Hub (Program Participant). Most creative activity occurs without incident. However, sometimes you may be responsible for compensating someone for an injury he/she suffered. For example, a volunteer may be injured while working for you, an employee or contractor may be injured while using a piece of your equipment, or a customer could slip and fall in your gallery. A valuable artwork could be stolen from your gallery. Accordingly, anyone involved in Creative Enterprise Hubs should be prepared in the event of an accident.
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.
Even if the owner of a property is ultimately responsible for maintenance, a tenant or licensee occupying property may still be responsible for injuries occurring on the rented or licensed premises. Accordingly, you may be liable even though your project space is owned by a separate property owner.
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?
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, you could get workshop participants to sign a release form discharging you from liability in case of injury or accident;
- security measures (eg. alarms, smoke detectors, sprinklers). In most cases, the Administering Body has already provided the necessary security measures in your project space. If you are concerned about the security of your space, contact the Administering Body; and
- training, including occupational, health and safety training for you and your employees, contractors, and/or volunteers.
You can buy insurance, such as public liability, property, workers compensation, to protect you against the risk.
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 people or entities involved in Creative Enterprise Hubs:
- Public liability insurance covers 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 a Program Participant’s gallery, public liability insurance would cover any resulting damage suffered by the visitor;
- Product liability insurance covers 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 manufacture process. Accordingly, product liability insurance is particularly important to obtain if the project 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 manufactured by a Program Participant could pose a fire hazard;
- Workers compensation insurance covers harm to an employee injured at work. This is compulsory if the Administering Body or Program Participant has employees, and pays more than $7,500 in annual wages (cumulatively among all employees, not per employee). See below for additional information;
- Professional indemnity insurance covers damage caused to a person as a result of one’s professional activity. For example, a person relies on the professional opinion expressed by a Program Participant in an article and suffers damage because the opinion was incorrect;
- Property (building and contents) insurance covers the replacement and repair of things in the insured property, for example damage to a Program Participant’s studio or artwork, theft of materials;
- Transit insurance covers the replacement and repair of the insured item, for example art equipment stolen, destroyed or damaged during delivery or on loan;
- Volunteer insurance covers damage caused to a volunteer assisting in the Creative Enterprise Hub.
- The Administering Body should take out public liability insurance to cover any damage to people or property occurring in the Licensed Area, i.e. the space made available to it under its licence agreement with the property owner (Licence Agreement). The sample Licence Agreement in the Suite requests the Administering Body to maintain a public liability insurance policy in connection with its use of the Licensed Area.
- The Program Participant might be insured under the public liability insurance of the Administering Body for its use of the Licensed Area under the Participation Agreement. The Program Participant must ascertain to which extent, if any, he/she is covered under the Administering Body’s public liability insurance, and take out his/her own public liability insurance to cover any gap in protection in relation to his/her activities. For instance, the Administering Body’s public liability policy might fully cover any damage caused to people or property in the Program Participant’s project space used as shop, but not extend to any liability the Program Participant incurs in relation to a market stall where the Program Participant sells his/her baskets. In that situation, it is essential that the Program Participant take out public liability insurance to protect against any claim for damage arising out of or in relation to his/her project.
As it essentially carries out an administrative function, not all of the insurance listed above is relevant to the Administering Body. In addition to public liability insurance (see above), the Administering Body might consider taking out the following insurance policies:
- Workers compensation insurance if the Administering Body has employees: under the Workers Compensation Act 1987 (NSW), workers compensation insurance is compulsory to protect against compensation claims for workplace injuries where you pay more than $7,500 in total wages (including overtime, leave payments, super etc) in a financial year, employ an apprentice or trainee or in other specific circumstances. See the Information Sheet ‘Employment Issues (for Employers)’ and visit the WorkCover website or contact the WorkCover Assistance Service on 13 10 50 (NSW only) for further information on workers compensation;
- Volunteer insurance in the event that volunteers are assisting the Administering Body: the volunteer insurance will cover damages suffered by a volunteer in the course of his/her activity for you.
As mentioned above, the Administering Body has possibly taken out a public liability insurance policy, which may extend to cover your project. Program Participants should inquire with the Administering Body as to whether its insurance policy offers the Program Participant any protection. However, even if this policy does cover your project, it only applies to harm you cause to a person or their property who visits your project space. It does not cover employees or volunteers or damage to your own property.
Accordingly, you should strongly consider purchasing your own insurance policies to cover any risk not covered. Some insurance is compulsory. You may need more than one type of insurance, such as:
- Workers compensation insurance: under the Workers Compensation Act 1987 (NSW), you must insure against compensation claims for workplace injuries where you pay more than $7,500 in total wages (including overtime, leave payments, super etc) in a financial year, employ an apprentice or trainee or in other specific circumstances. See the Information Sheet ‘Employment Issues (for Employers)’ and visit the WorkCover website or contact the WorkCover Assistance Service on 13 10 50 (NSW only) for further information on workers compensation;
- Contents insurance: the Administering Body’s policy does not cover goods, equipment or personal effects brought onto the premises by you as part of your project. Accordingly, you should obtain contents insurance to protect goods and equipment in your premises from damage or theft;
- Other insurance: you may consider taking out other insurance policies (eg. general business insurance, volunteer insurance) or you may otherwise be required to take out other insurance policies by law. You should speak with 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;
In some cases, group insurance may be available and a cheaper option for you. For example:
- NAVA provides advice on insurance for visual artists and craftspeople;
- 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.
See the related sample agreements at the top-right of this page.
The following publication on insurance issues is available from the Arts Law Centre of Australia:
The Arts Insurance Handbook: A Practical Guide for Artists and Arts Organisations, by Catherine Fargher and Seth Richardson, 2nd ed, Arts Law Centre of Australia, 2005
JusticeConnect: Insurance for NGOs http://www.nfplaw.org.au/insurance
Need more help?
If you have questions about any of the topics discussed above please contact Arts Law.
The information in this information sheet is general. It does not constitute, and should be not relied on as, legal advice. The Arts Law Centre of Australia (Arts Law) recommends seeking advice from a qualified lawyer on the legal issues affecting you before acting on any legal matter.
While Arts Law tries to ensure that the content of this information sheet is accurate, adequate or complete, it does not represent or warrant its accuracy, adequacy or completeness. Arts Law is not responsible for any loss suffered as a result of or in relation to the use of this information sheet. To the extent permitted by law, Arts Law excludes any liability, including any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this information sheet.
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