Thursday, July 31, 2014

To insure or not to insure?

How can $100 can save you $100,000 and keep your business alive?


For a lot of people insurance can be a hard topic. Some think is not needed, some think is a waste of money and others can’t imagine working without it. I choose to think of insurance as an investment; while others see it as an expense.
Consider this: most insurance companies will charge you around $100 to $200 for a full year of coverage. For the average painter that means that they can pay for their annual insurance with 1 to 2 gigs (if you are charging less than $100 an hour you might want to re consider your rates). Not too bad, right?
Now, consider what you are getting: peace of mind, potentially more jobs (many malls and fairs won’t work with you unless you have your own insurance), and coverage in the rare case of a claim.


Why do I see it as an investment? Because if $100 can get you into jobs that you couldn't have done without it, then, as long as those jobs bring you in more than $100, you profit from having insurance.
Also, what could happen if you get a claim and you didn't have insurance? Most likely you will be put out of business and find yourself in major debt. So, that $100 can be the best investment you ever did.
Some say claims in our industry are so rare you shouldn't worry about them, but many still have life insurance, car insurance, home insurance, health insurance, and play the lottery, even though you may also be dealt with small odds of something critical happening. The thing is that, although chances might be high that you won’t get sued, if you do, the expenses related with a court case are most likely impossible to afford on your own and all of your dreams of running your own business could be over. We hate to say it, but we know that very well at Jest Paint.

Being careful in any matter concerning your business won’t be the answer to avoiding a law suit. Keep this in mind, even when you haven’t done anything wrong, you can still get sued by someone trying to get money from you through a settlement. Just to defend yourself and prove you haven’t done anything wrong can cost you a small fortune. Our legal fees were over $100,000, even after wining the case, and it didn't even make it through the traditional court process. 
Thankfully, our insurance took care of the crazy huge bill and we only had to pay a small deductible. Without insurance, we simply wouldn't be here. We were surprised to find out that to get a lawyer to start representing you, you would have to pay a large retainer fee from the get go.  This can start at  $3000, which barely covers the initial paperwork to respond to the plaintiff. If we didn't have business insurance we wouldn't even have been able pay to defend ourselves. We would have lost the court case, and would have had to pay for all of the money that the plaintiff requested in damages, which would have taken two lifetimes, even though we were innocent. If you find yourself in a similar situation, all of that drama can also be avoided for you and your family with a small insurance investment.
We thank God every day that we chose to get business insurance when we did. Going through a law suit was stressful and emotionally draining, but we were confident that we would come out on top and that our business would be able to thrive.
Of course, insurances are not always there when you need them. You need to make sure that you are getting the proper coverage so that you will be protected when you need it. READ your policy, ask questions, and don’t sign if you are not comfortable with it. Most insurances won’t let you read the entire policy until you sign, but you have the right to cancel within a certain time frame after you have read the policy if you don’t agree with it. Make sure that every aspect of your business is covered under the insurance and that you work within that frame so you don’t void your policy.
In the end, it is your call as a business owner to do what you think is best for your business. Just make sure that you consider every angle, and always think on a long term basis if this is something you are doing as a career rather than just a hobby.
Is there an insurance company that you would like to recommend to other artists? Write a comment below and let us know who you work with.

Disclaimer: we are not lawyers and our opinion is based on our personal experience. We recommend for you to always check with a lawyer before making any decision. We are not in any ways giving legal advice and we are not liable for any decisions you make or stop making based on the opinions provided above.

"Image courtesy of foto76 / FreeDigitalPhotos.net".

5 comments:

  1. I had never heard of someone who had actually used/needed their insurance before. Thank you for sharing that experience. Paying for peace of mind just in case someone just likes suing people probably is not a bad idea if you have a lot of jobs, but what if you only have 1 job a month? There aren't any fairs or malls around my town, it is just to small. So it won't get me more business. Should I have each birthday event sign a contract? Or post a sign that says, "I use only high quality paints with a very low chance of allergic reaction, however, be face painted at your own risk, you are not allowed to sue me"???? Haha. I'm sort of joking about the wording there, but as a small time face painter I wonder what the best option is.

    ReplyDelete
    Replies
    1. Cynthia, that is a question you should ask to a lawyer. In our personal opinion, liability waivers and signs don't provide the same protection (if any) as insurance could. Keep in mind that getting insurance is fairly easy, and if you have another regular job, you might want to consider using some of that money to invest in insurance for your business. In the end, is a personal decision, and you should consult with a lawyer to get the best advice.

      Delete
  2. Thank you Anna and Santiago for sharing your personal experience and opinon. I have added your article link to my website, as this is important information to share.

    ReplyDelete
  3. P.S. I am retired from face painting but still active in the fp community and still keep my website up, which is where I have added your article link. http://jinglesandtricia.blogspot.com/

    ReplyDelete
    Replies
    1. Thanks Tricia for sharing this. I hope you enjoy your retirement. You have a great blog!

      Delete