Legal Landscape:
Business Insurance 101 for Music Teachers, Part 2

Deborah H. How

MTNA Business Digest, Volume 3, Issue 2

October 2023

A four-part series of articles debuted in the previous Digest to take a deeper look at insurance for music teachers. In this issue, Part 2 continues with a focus on general liability insurance and will also touch on workers’ compensation for studios/schools who have employees and commercial umbrellas for teachers who carry commercial leases.

General Liability

According to The Hartford website, Liability insurance covers 1) Third-party bodily injury, 2) property damage, and 3) personal injury (libel or slander).

Workers’ Compensation

Workers’ Compensation insurance is state regulated (check with your state) and covers employees for 1) medical expenses, 2) lost wages, and 3) rehabilitation costs , states the Nationwide website.

Commercial Umbrella

Commercial Umbrella insurance is sometimes required when leasing a commercial space (check with the property manager before you sign the lease) and extends the coverage of a General Liability policy, including 1) legal costs/judgments/settlements, 2) medical bills, 3) damage to other people’s property (Metz 2022).

This article addresses five primary teaching settings for music teachers: 1) home studio, 2) itinerant/traveling, 3) commercial studio space, 4) employee/independent contractor at a music academy and 5) faculty at a public/private K–12 school or college/university/conservatory.

Home Studio

If you teach from your home studio, check your homeowners/renters insurance policy to confirm that your home-based business is covered. In most cases, unfortunately, homeowners/renters insurance does not cover liability claims that arise from a home-based business activity. State Farm discloses:

“While your homeowners insurance policy might come with liability protection for certain incidents that happen inside your home, it does not extend to homebased, business-related activities. For example, if a customer comes to your home to exchange payment for goods or services and suffers an injury, there may not be coverage under your homeowner’s policy. Coverage gaps can easily be fixed with a business owners insurance policy.”

Teaching from your home is an example of a customer (student) coming to your home to exchange payment (tuition) for services (lessons). If a student trips and falls coming up the front porch stairs into your house for a lesson, sprains an ankle and requires physical therapy, your homeowners/renters insurance may not cover your student’s injury because your student was coming for a lesson, a home-based business activity. You would then be personally liable for the medical bills. Investopedia comments:

“Most home-based business owners will need home-based business insurance in addition to their homeowners policy. That’s especially true if you regularly have business deliveries to your home address or clients in your home. If someone injures themselves during a business-related visit to your home, you could be liable for their medical bills, which wouldn’t be covered by your homeowners insurance.”

In addition, if you have $5,000 or more of business property (which might include musical instruments, computers, sheet music, etc.), you may not be covered for property damage or data loss. For example, some teachers may already have a personal property floater for their grand piano in their living room—giving them extra coverage up to the value of their instrument—but personal property floaters typically only cover personal use of the instrument, not professional or business use of the instrument. (Kagen 2023) Double check with your insurance agent to ensure that your musical instrument is covered for business use in your home studio. (Musical Instrument Coverage Insurance will be covered in Part 4 of this series.)

While some homeowners/renters insurance policies have automatic endorsements that cover personal injury (libel or slander), not all policies do. Moreover, if your homeowners/renters insurance does cover libel and slander, it may not protect you against libel, slander, or defamation lawsuits that may arise from your teaching at your home studio.

Itinerant/Traveling Teacher

If you are an itinerant/traveling music teacher, it is unlikely that your homeowners/renters insurance will cover you for any business-related claims. Chances are that you will need business owners’ insurance and be sure that your insurance agent knows that you make “house calls,” i.e., you teach in your students’ homes and that you travel from one home to another home. For example, if you are teaching at your student’s house and something you do causes irreparable damage to their personal property, even if it’s accidental, the family may sue you and/or your teaching studio. Hiscox offers:

“… suppose you are tutoring in a student’s home, and their family has priceless collectibles. If an item falls over accidentally or there is a spill on an antique rug, they may make a claim against your business. General liability insurance could protect your business by covering the cost of the item.”

For both music teachers with home studios and music teachers who travel to their students’ homes, MTNA partners with the Trust for Insuring Educators (TIE)/Forrest T. Jones & Company and with Francis L. Dean & Associates, LLC to provide access to general and professional liability insurance policies for independent music teachers. (Professional Indemnity (Liability) Insurance will be covered in Part 3 of this series.)

Online Teaching

Music teachers who only teach online still face liability risks. According to Next, your online tutoring [teaching] business can still be susceptible to third-party claims, including:

• Accidents and Injuries: Your student gets hurt during an online class, and they request that you cover the medical costs.
• Property damage: A science experiment [music lesson instruction] goes wrong and damages your student’s laptop. They sue you to cover repair or replacement costs.
• Defamation: You use a student’s picture and personal story for a before-and-after piece to promote your services. Your student sues you for reputational harm.

Commercial Studio Space

If you are renting a commercial studio space for your private music students, your landlord will usually require that you carry the necessary Commercial General Liability (CGL) insurance for your permitted use. If your landlord does not require CGL or you own the commercial space, be proactive and protect your teaching business and your personal assets by purchasing the CGL policies/endorsements that your agent recommends for your commercial studio space.

Music Academy Teacher

If you are a W-2 employee/independent contractor at a music academy, your employer should carry the necessary CGL insurance policy. However, if you teach at a privately-owned music academy, you may want to ask the owner—just to be on the safe side—especially if the owner also owns the building. While most commercial landlords require proof of CGL insurance, there are some who don’t; so just because you teach at a music academy in a commercial space, don’t assume that the owner carries CGL insurance or carries an adequate amount of CGL insurance.

If you are the commercial music academy owner and have employees, you may also be required to carry workers’ compensation insurance (check with your state). In California:

“… employers are required by law to have workers’ compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits. Workers’ compensation insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.”

If your music academy is within a larger office building, business park, or commercial complex, your landlord may require commercial umbrella insurance to extend your CGL coverage. Nationwide explains:

“Commercial umbrella insurance provides an extra layer of liability protection by covering costs that go beyond your other liability coverage limits. In other words, commercial umbrella insurance complements your other liability coverages by taking over when your other liability coverage limits have been reached.”

Faculty

If you are on faculty (employee) at a public/private K–12 school or college/university/conservatory, you should be covered under the institution’s general liability insurance policy. But in this current litigious environment, many professional organizations and insurance companies are recommending that teachers carry their own teacher liability (commercial general liability) insurance. Investopedia summarizes:

“You might assume that the school district’s liability policy will cover you, but that’s not the case. Typically, you aren’t named in the school district’s policy, so school districts won’t pay for your legal defense if they’re sued.

A commercial general liability policy will cover a teacher’s legal fees and judgments resulting from claims of bodily injury, emotional distress, or property damage due to non-professional negligent acts. It also covers personal and advertising injuries, such as wrongful invasion of privacy. It provides medical payment coverage if someone is injured while you are teaching, too. For example, if a student falls and breaks a bone under your supervision, a parent could sue you for negligence. [Commercial] general liability insurance is intended to cover you in this situation.”

No matter your teaching setting, a business owners insurance policy, or at the least, a commercial general liability insurance policy may be necessary to protect your teaching studio and personal assets. You will most likely need to also carry a professional indemnity policy (Part 3 of this series) and have separate musical instrument insurance (Part 4 of this series).

References

Metz, Jason, and Les Masterson, eds. Forbes, “How To Get Commercial Umbrella Insurance.” Last updated July 8, 2022. https://www.forbes.com/advisor/business-insurance/commercial-umbrella-insurance/

Kagan, Julia. Investopedia, “Floater Insurance: What it is, How it Works, Examples.” Updated May 28, 2023. Reviewed by Margaret James. Fact checked by Skylar Clarine. https://www.investopedia.com/terms/f/floaterinsurance.asp#:~:text=Floater%20insurance%20is%20a%20type,furs%20to%20expensive%20stereo%20equipment.

Deborah H. How, PhD, MBA is a connection builder/fundraising architect for nonprofit music organizations. She is the owner of Westside Music Conservatory, CEO of Musical Etudes and member of the MTNA Business Resource Network.