Don’t Skip Errors and Omissions Insurance
Q: I am starting a consulting business providing information services to organizations of all sizes and types, including production companies, public relations agencies and law firms. Can you give me some information on errors and omissions insurance? What is it, who should have it, and how much does it cost?
--Beth Eras, North Hollywood
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A: Errors and omissions insurance is part of the professional liability insurance package that consulting firms typically purchase under a miscellaneous policy that is highly specific to their realm of services. Many home-based or smaller consultants operate without professional liability insurance because they either do not know about it or feel they cannot afford it.
Any time you are providing services to others and you could be held responsible for damages they incur while following your advice, you have a variety of potential exposures. If you provide information to your clients that turns out to be inaccurate or incorrect and they rely on your information and spend money because of it, you could be liable for any expenses and any liability they incur because of the bad information you provided.
Or say you got some inside information and you disclosed it publicly. You could be sued for that. If you pass along information that you get from a service without proper permission, you could be in violation of copyright infringement laws.
The pricing of this insurance depends on what kind of information you are providing and to what type of clients. Say you are working in a limited area, such as providing Internet-based services. For $1,500 to $2,000 in annual premiums, you could probably get basic errors and omissions, personal and advertising injury coverage and general liability, which means you are covered if you have clients coming to your home and they are injured.
If you have a larger company and need a higher level of protection, you’re looking at a minimum of $2,500 to $5,000. If you need to add copyright infringement coverage, it will probably cost $5,000 to $7,000.
Talk to a broker with a lot of experience in professional liability exposure and get some firsthand knowledge on what he or she perceives your risk to be.
--Rick Hagemeier, vice president for risk management services,
Bolton & Co. Insurance Brokers, South Pasadena
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Q: I have been a musician for more than 30 years and have my own recording setup. I would like to be a provider of music to the producers and editors of the teasers that promote upcoming TV shows. I’ve approached dozens of agents, but they don’t handle musicians who do promo music. Should I send my CDs directly to the music departments of the major TV studios? How can I enlarge my client base?
--Maury Baker, Van Nuys
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A: The primary function of most music agents is to get work for performers by putting them in touch with the people who are hiring for films or TV shows. It sounds as though what you want to do is become a content provider, rather than a performer, so you probably do not need an agent.
What I recommend is that you research the various studios and get the names of the licensing people and the directors of on-air promos. Then contact them and ask if they are accepting music submissions. There are some studios that already have music libraries and they have set annual budgets that do not allow them to purchase additional music.
Seek permission from the places that are accepting music to submit your catalog on CD, then follow up. A good place to start your research is the Music Registry (818) 769-2722, which publishes an annual Film and TV Music Guide that is the standard source for contacts in the industry.
--Marc Ferrari, president,
Master Source Music Catalog Inc., Van Nuys
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If you have a question about how to start or operate a small business, mail it to Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. The column is designed to answer questions of general interest. It should not be construed as legal advice.
