As performing arts organizations begin to recover from the disruptions of recent years, they are facing a new challenge: a surge in insurance claims. While there is growing hope for recovery, many organizations are still struggling with gaps in their insurance coverage that could threaten their financial health.
Stefan Petrella, a senior vice president at Starkweather & Shepley, leads a team that specializes in insuring arts and entertainment entities. His group not only provides insurance but also helps these organizations understand their unique risks, especially those operating in historic venues or managing large events. Petrella emphasizes the importance of tailored insurance solutions for these nonprofits, as their needs can vary greatly based on factors like venue type and programming scale.
Every performing arts organization has its own risk profile. For example, a touring company faces different challenges compared to a theater that hosts regular performances. Petrella highlights the importance of contract reviews, as these documents can significantly affect liability and insurance needs. Geography also plays a role, as different states have varying regulations that can impact touring acts.
Liability risks can often lurk in unexpected places, particularly in relationships with third parties. Petrella points out that organizations involved in activities like acrobatics or summer camps need to be especially vigilant about these risks.
Sean Cottrell, another senior vice president at Starkweather & Shepley, notes that many nonprofits rely on standard management liability policies, which may not fully meet their needs. He warns that organizations often underestimate their exposure to cyber risks, which can include sensitive employee and donor information. Properly drafted contracts are crucial in determining liability when issues arise.
Organizations that work with children or young adults face additional risks, such as the need for abuse and molestation coverage, which is often limited in standard policies.
When it comes to freelancers, organizations must make careful decisions about insurance coverage. Established freelancers may have their own policies, but many organizations find it easier to include them under their own workers’ compensation plans.
Financial instability can also create risks for nonprofits. Many depend on grants and government funding, and any financial missteps can lead to scrutiny of board decisions. While claims related to insolvency are not common, having the right coverage is essential.
Both Petrella and Cottrell stress that insurance for arts organizations is not one-size-fits-all. Each case must be evaluated individually, taking into account the specific activities and exposures of the organization. As theaters reopen and the performing arts community seeks stability, understanding and addressing these insurance challenges will be key to their success.