Insurance for self-employed persons & civil law partnerships [Gesellschaften bürgerlichen Rechts (GbR)]
Self-employed means: having to get insurance yourself! The same applies to freelancers. Otherwise, they will have no coverage.
Links
Self-employed persons’ liability for damages:
Section 823(1) of the German Civil Code [Bürgerliches Gesetzbuch (BGB)]
Insurance for the loss of basic capabilities:
Basler Versicherungen
Accident insurance:
German Administrative Employers' Liability Insurance Association [Verwaltungsberufsgenossenschaft (VBG)]
Short-term disability benefits of the German Pension Insurance [Deutsche Rentenversicherung (DRV)] from the Artists’ Social Insurance Fund [Künstlersozialkasse (KSK)]:
Section 43 of Book VI of the German Social Code [Sozialgesetzbuch (SGB)]
Liability insurance
Liability for damages
The most important insurance for self-employed persons in the art and theatre scene is professional liability insurance.
A person who, intentionally or negligently, unlawfully injures the life, body, health, freedom, property or another right of another person is liable to make compensation to the other party for the damage arising from this (Section 823(1) of the German Civil Code). Violations of industry-specific rules, such as venue regulations, must result in liability, including for damages.
Example
While setting up, an expensive dancefloor is scratched which the venue then replaces. The responsible party will be fully liable to the extent of its business and private assets. Large damages may therefore result in personal bankruptcy.
| Protects: Employees | Does not protect: Freelancers (including artists), subcontractors |
Freelancers are not insured by the organiser!
Many performance artists think they are covered by the organiser liability insurance of the venue or theatre association. This is wrong!
Example of a typical liability insurance policy for freelance performers
- Policy: Business and professional liability insurance for performance artists and performers and their service providers
- Covered damages: Personal injuries, property damage and financial loss
- Insured persons: Policyholder, employees (except freelancers and contractors!)
- Coverage: EUR 6 million
- Insured risk: Depends on the job, e.g. actor, comedian, cabaret artist, reader, host, performer, acrobat, juggler
- Private liability: Included
- Run-off coverage: 5 years (for damages that become known after self-employment ends)
- Supplemental insurance, errors and omissions insurance: Insures newly-added risks, e.g. from new inventory, before they are reported to the insurance company. Accidentally omitted reports do not automatically lead to loss of coverage.
- Coverage in: Germany, but may also be extended to Europe or worldwide (excluding North America and cruise ships)
- Key loss: Insured, but compensation is only required if the injured party keeps a key register
- Rented object damage: Covers damage to and loss of temporarily rented or borrowed objects, such as lighting, PA systems, etc.
- Work-related damage: Covered in relation to professional activities, such as damage to the stage
- Other coverage: For pedagogical work, organiser protection on a small scale, pyrotechnics, environmental damage, Internet damage
Important: No insurance for intent
Liability insurance only covers violations and damage caused through negligence.
The main insurance for self-employed persons and civil law partnerships in the performing arts includes coverage for the following:
Liability for personal injuries, property damage and financial loss
Property damage, such as loss of or damage to props or equipment
Legal protection in case of legal disputes
Personal protection in case of short-term, long-term or total permanent disability
Retirement for old age
What does professional/business liability insurance cover?
- In case of legitimate damage claims, the damages will be managed (paid for) by the insurance company. Compensation for damaged property will only be provided at fair value.
- If claims are not legitimate, the insurance company will fend them off at its expense and through its own lawyers.
The costs of liability insurance depend on the case, e.g. the specific activity and whether an individual or a group contract was concluded. To determine insurance premiums, it is also important to know whether the insured parties are only performers or also organisers. In the latter case, they will receive extensive coverage.
Questions and answers:
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Is there combined private and professional liability insurance?
Yes, and it is useful. In practice, it is often difficult to determine if damages were caused privately or professionally, e.g. when having coffee after a show. Instead of two insurance companies arguing, the inclusion of private liability insurance provides full coverage from an insurer. Existing private liability insurance may not even have to be cancelled: many insurance companies will terminate the old policy if shown evidence of the newly-concluded double coverage. However, there is no legal entitlement to this.
Yes, and it is useful. In practice, it is often difficult to determine if damages were caused privately or professionally, e.g. when having coffee after a show. Instead of two insurance companies arguing, the inclusion of private liability insurance provides full coverage from an insurer. Existing private liability insurance may not even have to be cancelled: many insurance companies will terminate the old policy if shown evidence of the newly-concluded double coverage. However, there is no legal entitlement to this.
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What exactly is the difference between private liability insurance and professional liability insurance? If you are insured under your spouse’s liability insurance policy, are you also insured for work?
No, private liability insurance only covers damages caused privately or in one’s free time. Self-employed persons and partners of a civil law partnership require additional coverage for their professional activities.
No, private liability insurance only covers damages caused privately or in one’s free time. Self-employed persons and partners of a civil law partnership require additional coverage for their professional activities.
Rough cost estimate: While private liability insurance starts at around EUR 90 per year, self-employed performance artists have to pay at least EUR 150 per year. Policies with better conditions will costs EUR 200 per year and will include private liability.
Questions and answers:
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How can I prevent excess coverage or underinsurance of liability insurance?
This does not occur in liability insurance, but in property insurance, such as contents insurance. For liability insurance, it is important to specify your activities correctly. An acrobat who, due to a slump, accepts additional work as a steeplejack must report this to his insurance company.
This does not occur in liability insurance, but in property insurance, such as contents insurance. For liability insurance, it is important to specify your activities correctly. An acrobat who, due to a slump, accepts additional work as a steeplejack must report this to his insurance company.
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If a freelance producer wants to insure herself against disputes with funders, should she get professional liability insurance? Are repayments of funds covered?
No, such claims are not covered by professional or business liability insurance. ‘Real’ financial loss, such as incorrectly requested funding, requires additional insurance coverage, such as of a financial loss liability policy.
No, such claims are not covered by professional or business liability insurance. ‘Real’ financial loss, such as incorrectly requested funding, requires additional insurance coverage, such as of a financial loss liability policy.
Insuring props, event technology and other business assets
An artists’ inventory, including props and equipment, can only be insured through property insurance. 3 examples of claims:
- A puppet theatre’s car and all equipment and marionettes of three performances go up in flames in an accident. Because nothing was insured, the group can only ask for donations.
- A ventriloquist, a magician and a comedian have their microphones, amplifiers, merchandise, stage design elements, magic equipment and autograph cards stolen from a car. The damages will be covered by insurance.
- An event tent is destroyed in a storm. The insurance premium would have been EUR 600 per year, but replacing the tent costs EUR 50,000.
There are 2 variants for self-employed artists (including if in a civil law partnership):
- Special home insurance for artists which, in addition to possessions, covers props, equipment, etc., used for work
- Prop insurance either as an annual policy that may be extended or as short-term equipment insurance for a specific event or job
Features of a sample prop insurance policy:
- Policyholder: Artists, actors, comedians, theatre and event companies, musicians and other creative professionals
- Insured: Equipment and props at their replacement value (only fair value for electronics), i.e.,
- Analog props, such as costumes, chairs, trusses, instruments, stage elements, etc.
- Electrical props, such as instrument, lighting, sound systems, microphones, etc.
- Electronic devices, such as LED juggling equipment, photographic and film equipment, beamers, network systems, laptops, smartphones, etc.
- Transportable stages, tents with stage installations, circus trailers that do not have to be registered, etc.
- Insured risk: Damage during setup and removal, fire, including overvoltage, transport damage, burglaries, theft, vandalism, electronic damage, including loss of data and disaster damage (e.g. floods) at an additional charge
- Deductible: EUR 100, electronics EUR 150, tent EUR 1,000
- Coverage in: Germany, but may be extended to Europe or worldwide at an additional charge
- Premium: EUR 175 for EUR 10,000 of coverage
- Other provisions: Underinsurance waiver, i.e., the insurance company will also pay up to the total coverage in case of underinsurance.
Underinsurance:
The coverage should reflect the value of what is insured and may not come out of nowhere. If there is no underinsurance waiver, the following applies: If equipment worth EUR 100,000 is only insured at EUR 50,000 (50% underinsurance), the insurance company will only provide payments at this rate. In case of total loss, you will only receive 50% of coverage, i.e., EUR 25,000. This is why an underinsurance waiver is important.
Questions and answers:
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Are props also insured if kept in someone else’s storage facility? Or should this be reported separately?
Storage facilities should be reported to your insurance company. Props and equipment are insured anywhere, including backstage, in a vehicle or in a (lockable!) trailer. Multiple storage sites may be reported, such as winter warehouse or storage rooms. Take advantage of this.
Storage facilities should be reported to your insurance company. Props and equipment are insured anywhere, including backstage, in a vehicle or in a (lockable!) trailer. Multiple storage sites may be reported, such as winter warehouse or storage rooms. Take advantage of this.
Liability for financial loss
- Business liability insurance covers ‘false’ financial loss: consequential financial loss caused by property damage or personal injury, such as loss of earnings of an accident victim.
- Financial loss insurance covers ‘real’ financial loss: financial loss of third parties that is a direct consequence of negligence.
| Professional/business liability | Liability for financial loss |
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Most freelance artists don’t need liability insurance for financial loss. However, things are different when requesting funding for others, acting as an agency or organiser or advising customers. This insurance covers financial loss of third parties (e.g. principals and project partners) that is caused by mistakes such as:
- Not filing a funding application on time and leaving the principal without funds.
- Damaging the joint project by infringing personality rights or copyrights on the website.
- Being responsible for others’ inability to fulfil their contracts.
- Planning emergency escape routes incorrectly and forcing the principal to cancel the event.
In Germany, few insurance companies offer liability insurance for financial loss which must be adjusted to the specific activity and is relatively expensive. Such insurance should have coverage of at least EUR 100,000 and more is often necessary. Premiums depend on revenue, the activity and the coverage, but expect EUR 200 per year.
Legal insurance and its limits
Unlike liability and property insurance, legal insurance is not indispensable for self-employed performance artists.
Not included: Legal insurance for contractual disputes
Although it is often requested: legal insurance does not cover lawsuits against principals or organisers who won’t pay fees or fulfil other obligations. (Legal insurance for contractual disputes is only available to self-employed certified professionals, not to freelance artists.)
Coverage available to self-employed persons:
- Traffic violations and driver protection: useful when traveling often, e.g. on tour
- Real estate—only useful for owners, landlords or tenants of their own venue
- Insurance company disputes
- Special prosecution insurance—covers attorney and court fees in case of a criminal trial, unless you are sentenced for intent
- Legal insurance for contractual disputes involving auxiliary activities—while contracts involving the main activities cannot be insured, insurance may be provided for disputes with, e.g. leasing companies, because they represent secondary activities
- Claims management/debt collection—requires assigning claims to external service providers
- Insurance for disputes under private law—normally included in legal insurance for self-employed persons
Benefits include defence against and exercise of claims based on
- Compensation for damages
- Employment law
- Tax law (may be especially useful to self-employed persons)
- Before social courts
- Administrative offense or prosecution protection (e.g. when accused of tax evasion or subsidy fraud, unless you are sentenced for intent)
- Legal protection as a victim of a violent crime
- Data protection law (in court)
Your attorney fees (in accordance with the German Act on the Remuneration of Lawyers [Rechtsanwaltsvergütungsgesetz (RVG)]), court fees and, if applicable, the expenses of the opposing party will be borne. Legal insurance almost always requires a deductible.
Personal insurance
Provides protection in the following 3 cases:
- Short-term disability: Inability to work due to illness. Example: having to take several months off due to an accident resulting in a complicated fracture.
- Long-term disability: Inability to perform one’s profession. Example: back pain prevents standing for longer periods and working as an actor.
- Total permanent disability: Inability to make any living.
Available for protection:
- Accident insurance – statutory and private
- Long-term disability insurance
- Total permanent disability insurance
- Short-term disability benefits
- Disability risk insurance
- Short-term disability insurance
- Mandatory statutory insurance (Artists’ Social Insurance Fund) and other alternatives
This protection is especially important for young creative self-employed persons. The insurance market can be difficult to navigate. An insurance broker will help you find a suitable and affordable solution.
Important: Unlike employees, self-employed persons have to get insurance themselves!
Long-term disability
Although this form of protection is very useful, it is not offered to most self-employed artists: Insurance companies fear pension claims in case of creative crises. As an alternative, such insurance may be obtained when at university or in school. Agents, organisers, etc., may get such insurance at any time.
Important: Long-term disability insurance requires disclosing information about your health. Such insurance is often denied if you have back problems, allergies or underwent psychotherapy. Nonetheless, information should not be withheld, since you may otherwise lose benefits—even if you paid premiums for years. The limitation period for misstatements lasts 10 years.
Questions and answers:
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What happens to long-term disability insurance when you change your profession?
Most insurance companies say: once insured, always insured. The only exceptions may be cheap policies.
Most insurance companies say: once insured, always insured. The only exceptions may be cheap policies.
Disability risk insurance
This insurance may be an alternative if long-term disability cannot be insured because of your artistic profession or health. This insurance covers ‘basic abilities’, such as sight, hearing, seating, walking, climbing stairs, driving, working in front of a screen, etc. See Basler’s offer for an example. The health requirements for such insurance are less strict than for long-term disability insurance.
If you lose your basic abilities, you will be paid a pension agreed in advance. How high this pension is depends on your premiums. A 25-year-old performer may pay approx. EUR 44 per month for pension insurance claims of EUR 1,000 per month. Disability risk insurance only makes sense if the agreed pension exceeds government benefits, such as Unemployment Benefit II [Arbeitslosengeld (ALG) II].
Questions and answers:
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Which is better: long-term disability insurance or disability risk insurance?
This may differ in each case. There are cases in which only long-term disability insurance will provide benefits and cases in which things are the other way around, depending on your health condition.
This may differ in each case. There are cases in which only long-term disability insurance will provide benefits and cases in which things are the other way around, depending on your health condition.
Accident insurance
For protection in case of accidents, self-employed performance artists have 2 options:
- Voluntary membership at the German Administrative Employers' Liability Insurance Association [Verwaltungsberufsgenossenschaft (VBG)] (statutory accident insurance): The German Administrative Employers’ Liability Insurance will only provide benefits following work accidents, commuting accidents or occupational illness. Benefits consist of injury benefits, a pension and rehabilitation services (better than statutory health insurance, e.g. more physiotherapy).
An advantage of joining the German Administrative Employers’ Liability Insurance Association is the protection provided through rehabilitation and income supplements when taking a long time off, even for work with a high risk of accidents (e.g. for acrobats). However, disputes about benefits are not rare. Even a brief pause when driving home from work may prevent coverage of future traffic accidents—something worth considering for performers who regularly travel long distances. - Private accident insurance: Such insurance will provide payment if an accident leads to disability or lasting damage. The amount paid depends on the degree of disability. Private accident insurance has the advantage of also covering accidents suffered in one’s free time. In case of sufficient coverage, you may be able to equip your apartment to the needs of your disability, buy better wheelchairs or maintain a living.
For beneficiaries of the Artists’ Social Insurance Fund: statutory social security benefits
Anyone who pays statutory pension or health insurance premiums, e.g. for coverage under the Artists’ Social Insurance Fund, is entitled to the following benefits:
- Short-term disability benefits of the German Pension Insurance [Deutsche Rentenversicherung (DRV)] through the Artists’ Social Insurance Fund [Künstlersozialkasse (KSK)]: This pension insurance also provides benefits in case of reduced earning capacity, though these benefits are fairly limited (Section 43 of Book VI of the German Social Code) and require having paid premiums for at least 5 years overall—and for at least 3 of the last 5 years. If you are able to work for less than 6 hours per day, you will receive half of the short-term disability benefits and full benefits if you can work for less than 3 hours a day. How high the pension is depends on how long which premiums were paid.
- Sick pay of statutory health insurance companies: Persons with statutory health insurance may receive 70% of their last net income as of the 43rd day of inability to work. Those who choose statutory health insurance must have sick pay claims to receive such benefits. For self-employed persons, sick pay is determined by the average of the last 12 months. For those insured under the Artists’ Social Insurance Fund, sick pay is determined by the income reported to the Artists’ Social Insurance Fund: reporting a low income will reduce sick pay. Many health insurance companies provide the option of receiving sick pay sooner. Another advantage of sick pay: it is also provided if your children get sick and caring for them prevents you from working.
Retirement investment
One of the biggest problems of self-employment in artistic professions is that no steadily-increasing business value is accumulated which can be monetized later by selling the business. This is why investing in retirement is especially important for self-employed artists.
Those insured under the Artists’ Social Insurance Fund pay statutory health insurance premiums. Only you can decide if this will provide enough support in the coming decades. Other options for investing in your retirement:
- Real estate
- Private pension insurance—of which there are many variants with and without subsidies, such as basic pension insurance which may be provided with guarantees (not always useful) or, if requested, sustainable investments, etc.
- Securities with your own portfolio, as ETFs (index funds), classic fonds, etc.
Although there are many options on the market, not all are suitable. An important rule: get reliable advice and don’t use products you don’t understand.
When should I start thinking about investing in my retirement?
It is often said that you should start investing in your retirement as soon as you become self-employed. However, in this phase, it is often better to invest available capital into your business. Once you established a steady income through your self-employment, you should start investing in your retirement.
Questions and answers:
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Is business interruption insurance useful for self-employed artists?
Business interruption and event cancelation insurance may be useful for businesses, but not for self-employed persons without business assets. You are better off with personal insurance in case you can’t work.
Business interruption and event cancelation insurance may be useful for businesses, but not for self-employed persons without business assets. You are better off with personal insurance in case you can’t work.