By James Fletcher
Insurance policies are full of specific terminology. Here's a clear glossary of the most important music insurance terms.
Agreed Value vs Market Value
These two terms describe how your insurer calculates what to pay you if a claim is accepted. Agreed value means you and the insurer agree upfront on what the instrument or equipment is worth — and that's what you receive if it's stolen or destroyed. Market value means the insurer pays what the item was worth at the time of the loss, which may be less than you paid for it due to depreciation, or may differ from your expectation of value. For specialist, vintage, or appreciating instruments, agreed value is almost always the better choice.
Excess
The excess (sometimes called a deductible) is the amount you pay out of pocket on each claim before the insurer pays the rest. An excess of $500 means that on a $5,000 theft claim, you receive $4,500. Excesses exist to prevent small, frequent claims and to give you a stake in managing risk carefully. Some policies have different excess amounts for different types of claims — for example, a lower excess for accidental damage and a higher excess for theft from an unattended vehicle. Understand your excess before you need to make a claim.
Public Liability
Public liability (PL) insurance covers you if a third party — an audience member, venue visitor, student, or bystander — suffers injury or property damage as a result of your activities or your equipment. PL covers your legal defence costs and any damages awarded against you. It does not cover your own injury (that's covered by ACC in New Zealand) or damage to your own equipment (that's covered by equipment insurance). Most venues require performers to hold public liability insurance as a condition of booking.
Professional Indemnity
Professional indemnity (PI) insurance covers claims arising from your professional advice, services, or expertise — rather than from physical injury or property damage. For music teachers, PI covers claims that your teaching advice was wrong, your methods caused harm, or your professional conduct was deficient. For music producers, PI might cover claims that your work on a project didn't meet professional standards. PI is distinct from public liability and is particularly important for music teachers and music-related professionals who give formal advice or services.
Sum Insured
The sum insured is the maximum amount your insurer will pay in the event of a total loss. If you insure your equipment for $15,000, that's the most you can receive — even if the equipment is actually worth $20,000. Getting the sum insured right is essential: under-insuring means a shortfall at claim time; over-insuring means paying unnecessary premium. Review your sum insured at every renewal and update it when you acquire new equipment or when market values change.
Transit Cover
Transit cover extends your equipment insurance to cover items while they're being transported — in your car, van, hired vehicle, or public transport. The key questions for any transit cover are: Does it cover theft from unattended vehicles? What conditions apply (locked vehicle, items out of sight)? Does it cover hired vehicles as well as your own? Does it extend to airline cargo holds for international travel? Transit cover is one of the most practically important parts of any musician's equipment policy — most claims involve transit in some way.
Business Interruption
Business interruption insurance covers the financial losses that continue after an insured event — typically beyond the immediate cost of repairing or replacing damaged property. For a recording studio forced to close after a fire, business interruption insurance covers the revenue the studio cannot generate during the closure period. For an event organiser whose event is cancelled, business interruption aspects may be part of the cancellation insurance cover. This type of cover is particularly important for businesses where the inability to operate generates ongoing losses beyond just the immediate physical damage.
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