Record Label Business Insurance
Getting business insurance for your record label is essential.
Business insurance policies can provide protection against unique risks encountered by record labels, like intellectual property infringement claims.
For example, an artist could claim that you stole their music and an expensive lawsuit ensues, costing your business millions of dollars.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Record Label
General liability insurance is — generally speaking — one of the most important insurance policies for record label companies.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
There there are specific types of insurance policies that record label businesses can obtain to protect themselves against additional risks:
- Errors and Omissions (E&O) insurance: This policy provides coverage for legal claims arising from alleged errors or omissions committed by the label in its operations. For example, a recording artist sues a label for not fulfilling contractual obligations.
- Property insurance: Covers damage or loss related to physical assets such as buildings, equipment, and inventory. Can protect against fire, theft, vandalism, and natural disasters.
- Copyright insurance: Protects against legal claims related to the unauthorized use of copyrighted material.
When selecting an insurer for your business coverage needs, there are two options: a traditional brick-and-mortar insurer and one that operates online or digitally:
Traditional brick and mortar insurers: Have a physical office where you can get assistance if needed. Have higher overhead costs that mean higher premiums for policyholders.
Online insurers: Less costly since they do not require a physical office space, more convenient because everything can be done online, plus you can compare rates side-by-side and determine how much insurance you need to buy.
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Cost of General Liability Insurance
On average, record labels in America spend between $300 - $600 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a record label to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Record Label
Example 1: During an artist’s initial launch, your label promises a discount on their next release to anyone who pre-orders the first album. Because that album sells poorly, your label never releases a second one. If the people who pre-ordered the first album file a false advertising lawsuit, general liability insurance would cover your legal fees and any damages awarded in a settlement.
Example 2: An agent slips on a wet floor in your office and injures themselves. General liability insurance would cover the agent’s medical bills related to the accident.
Example 3: When an employee makes false claims about a competitor and several media outlets publish those statements, the competitor files a defamation lawsuit against your label. General liability insurance would cover your legal fees and any damages awarded in a settlement.
Other Types of Coverage Record Labels Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Product Liability Insurance
When you sell products to the public, there’s always a chance a customer may file a lawsuit if they believe one of your products caused significant harm—such as if a child suffers internal bleeding after ingesting pieces of a shattered CD. Product liability insurance would protect your business by covering your legal fees and any damages awarded in a settlement.
Professional Liability Insurance
Professional liability insurance covers work-related errors, including those associated with copyright infringement. If someone accuses your label of plagiarizing a previously published song, this coverage would pay for your legal fees as well as any damages awarded in a settlement.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability benefits stemming from a work-related accident.
For your performing employees, such as singers and musicians, make sure you understand how your policy covers voice, hearing and repetitive-motion issues they may suffer as coverage often depends on the performer’s relationship to your company and how the issues develop.
Commercial Property Insurance
If your record label owns an office or recording studio, you’re responsible for all business-related property housed there in the event of a fire, burglary, or natural disaster. Commercial property insurance would cover the cost of repairing or replacing your recording equipment, computers, and other business property after an accident so you can recover quickly.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they exceed the limits of your primary coverage—such as a copyright infringement claim on one of your most successful albums. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your record label:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Record Label Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Yes, you’ll want to purchase business insurance early on for your music label business. This is to protect your proprietary interests early, plus to avoid certain other risks. For example, someone could steal your music rights, claiming the music as their own.
Not necessarily. Certain exceptions may be written directly into your record label insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.