It’s that time of year when you might be considering adjusting your insurance needs to your business model. NPPA’s business writer Alex Garcia discusses insurance options with Kevin Johnson, Lockton Affinity program executive. Lockton is the insurance partner for NPPA members. They talk about drone coverage, disaster coverage, explain e-commerce and general liability claims. And what is cyber liability and do you need coverage? Read on.
Kevin Johnson has been a program executive for the last 10 years with Lockton. Lockton Affinity offers efficient, dedicated and accessible customer services at rates exclusive to NPPA members. If you want more information or have questions about your coverage, please contact Lockton at 844-307-5956 or by email at [email protected].
Alex: I want to give you an opportunity to tell us about Lockton Affinity and what it offers to visual journalists.
Kevin: We aggregate as much business as possible to the benefit of NPPA members. What I mean by that is we’re going to aggregate so that we can get the best coverage terms and broadest coverage we can possibly get. We also leverage the buying power of the group to negotiate with various insurance companies to get the absolute best price for our customers.
Alex: So you act as an intermediary for our members and insurers?
Kevin: Yes, exactly. A lot of our clients look at us as an agent, which is fine for us to play that role. We are the ones working with insurance carriers on behalf of NPPA members to get them access to customized insurance options.
Alex: How often are you re-evaluating and switching the insurance companies that you contract with in order to get better deals for your insurers?
Kevin: Good question. So we’re slightly different than what a typical local agent would do. A local agent a lot of times is going to shop it every year. We try to partner with companies that we know are going to have the flexibility and ability to offer broad coverages and competitive prices for the long term.
Alex: Tell me a little bit about the e-commerce site.
Kevin: We continue to build out and improve our e-commerce platforms. The streamlined approach allows members to fill in their contact information, product information, supply their camera equipment information, answer a few questions and submit payment. And usually, within 30 minutes or less, they receive their insurance policy, including a certificate of insurance they may need to show to a bank if they’ve taken a loan out on their camera equipment.
Alex: Can people get certificates of insurance through that website?
Kevin: They just have to email in to our team, or they can submit a request on the website. That request goes into a customer service team. We’ve got a group of four people who are dedicated to the program and other programs that are related to this industry. The turnaround time on that is 24 hours. If it’s a rush, we can turn a certificate around in under an hour.
Alex: Is there any extra charge for a certificate of insurance?
Alex: So bringing it back to just a general overview, what’s the bare minimum that a visual journalist should insure?
Kevin: Well, first, on the camera equipment side of it, they need to go and take inventory of what they have. Once they have completed that process, they should go online or call us so we can provide them with a quote. I think they at least need to explore the general liability insurance because if they were to be out on location on a shoot, on a job, and someone were to get injured as a result of their actions and their negligence, whether it’s someone tripping over a tripod or tripping over their bag and hurting themselves, they could be held personally liable. Those are the first two coverages that I think all NPPA members should look at.
Alex: Give me an example of that kind of coverage and how it works.
Kevin: We’ve paid general liability claims where someone had either a bag of their gear, or they had their camera set up on a tripod, they tripped over a bag, they tripped over a box ... and they fell and hurt their back. And then the person is also demanding they pay for medical bills. And in one situation, we had a third party who threatened to sue the insured because of her injuries. It just takes, unfortunately, one bad day where your personal assets could be exposed. Then we look at how inexpensive the liability premiums are in the program, it really doesn’t cost you that much just to be able to take that exposure, for a lack of a better term, out of the equation.
Alex: How much do you recommend that people take out?
Kevin: Our policy for general liability is a million dollars per occurrence. It’s $2 million in the aggregate. What that means is for any one claim, it’s going to pay a million dollars. And you can have two $1 million claims in a 12-month period. Hopefully, no one needs to use it, but it’s nice to have that security blanket.
Alex: Is it possible to be over-insured?
Kevin: Oh, sure. Absolutely. That’s a great question, by the way. I mean, we have some people who aren’t doing anything different than your average NPPA member or your average photographer, and they’ll be asking about a $5 million insurance policy from a liability standpoint. You’ll see the same thing from drones. Drones are interesting right now because you see a lot of beaches, municipalities, cities who are asking for exorbitant amounts of insurance from a liability standpoint, anywhere from $5 million to $10 million, which seems to be excessive based off of what we know about drone-related claims from a liability standpoint.
Alex: But if somebody is demanding that, is that something that you offer?
Kevin: We currently offer the million-dollar policy on our e-commerce platform; however, we can secure quotations for higher limits. We have been in the photographer space going on seven years and based off of our history from an underwriting standpoint, the history of the insurance carrier that we work with, we just haven’t seen general liability claims that have breached or were close to breaching that million-dollar limit of insurance.
Alex: Just out of curiosity, how much would, in general, a $5 million policy for a single assignment be?
Kevin: Our policy for a million dollars in coverage, all in with some of the fees and taxes that come into that, is just under $300 on an annual basis. It’s not one of those situations where you can take that times five because it starts getting less expensive as you go up with higher limits. That gives you a ballpark in terms of where we’re at for a million-dollar limit.
Alex: I know photographers who have not yet professionalized their businesses yet, so instead of setting up a separate business, they will end up trying to take care of liability by adding to their home insurance policies.
Kevin: The things you have to look out for if you’re going to take that approach is, one, your agent, once you tell them what you’re going to do, they’re going to ask a lot of questions, and you’re going to have to answer in terms of what your business is, which could jeopardize or increase the cost of your homeowner’s insurance. The other thing is you really have to do a lot of research to make sure that the endorsement, which is adding that coverage on to your business owner’s policy, is comprehensive enough to cover you for what you’re doing. There are a lot of things that go into this industry for your members. And to make sure that if they’re traveling abroad, that there are certain events, certain countries, to make sure that that’s covered. Or a lot of times your homeowner’s insurance is going to have restrictions depending on where you’re at and what you’re doing.
Alex: Speaking of going overseas, are most insurance policies both from a camera equipment and also liability? Does that cover visual journalists overseas?
Kevin: First, let’s start with camera equipment. If you’re traveling and something happens to your camera equipment, our policy responds to that claim. From a liability standpoint, just because laws and rules are so much different than all the other countries, the suit has to be brought in the United States for our general liability policy to cover you. That’s pretty consistent across all the other insurance companies that are out there.
Alex: OK. You touched upon something earlier about legal agreements that visual journalists might get into sometimes. And I’m kind of curious about indemnification issues. Say that they sign something and they don’t realize that they’re agreeing to cover somebody else in case something happens to them. Is there something within the policy itself that might say, well, no, hey, we never agreed to doing that kind of thing? How would that work?
Kevin: Yes, there is. The first thing that I would say there is if any of your members are looking into a contract and there are insurance provisions in there, that’s a free service that we provide. So our customer service team will look at those and can tell you, yes, this is standard. No, this is excessive. And they can also outline what our policies cover compared to what their contract is. So we’ll start with that first. Secondary, yes, there are ways, for the most part, to add endorsements or add wording or change wording to an insurance policy from a whole harmless standpoint or a waiver of subrogation standpoint depending on what the contract wording is and how weighted that contract wording is towards one party versus the other.
Yeah. So we look at the contract agreement and help tie in and make sure what our insurance coverage matches up or at least explains if it doesn’t match up with the contract that one of your members might sign into or might already be signed into.
Alex: So if someone has that contract, they can send it to you, and do they hear back within 24 hours? Or how long does it take?
Kevin: If it is a standard contract, then our average turnaround time is 24 hours.
Alex: You also mentioned workers’ compensation before. When should a member be concerned about needing to insure the people who work under them?
Kevin: It really just depends on how many people they have working for them. If they’re just one person, they’re normally not going to buy workers’ comp insurance. Once you start to have employees, they’re trying to make a decision on purchasing health insurance for them or what to do. Usually when they get a full-time person or if they start to get into two full-time people working for them, that’s when they usually reach out to our office to start securing workers’ compensation quotes.
Alex: I just had a conversation with a CPA. Most of us who are freelancers or who have our own companies, we basically are hiring people on a project basis. They’re not employees. There are some people who live in some states, however, who, for whatever reason, are being pressured by maybe state law to put people on payroll to pay them hourly versus paying them on a project basis. Once you put somebody on a payroll, does that mean that you have to purchase workers’ comp for them?
Kevin: It depends on the state laws.
Alex: And so if somebody had those questions, who should they go to then?
Kevin: They can call us for sure. We’re used to taking those calls. Just to make sure they’re abiding by the laws in their state.
Alex: You also mentioned drones earlier. And obviously, that’s a big issue nowadays.
Kevin: So we’ve been working on drones for more than two years. We first started off working on insurance for the actual drone itself. So if you’re flying a drone, it flies into a tree, the property damage of the drone, the property coverage on that drone, we cover that now. The pricing on that has gone down dramatically over the last two years. We created a customized solution for photographers from a liability standpoint. We can get policies with limits ranging from half a million in limits up to $10 million in liability limits depending on what the person is doing. It’s a quick application. They contact us, and we’re able to get them quotes for that.
Alex: What if you only fly, like, maybe once or twice? Is there a way to purchase it just for that day as a rider?
Kevin: I think we’re close to that. There are some other programs out there where you can actually go in and buy it on your phone for single jobs. The only comment I would make about that is you have to be cautious. If you start off doing one job, those apps and those insurance programs work well for that. So if you start doing multiple jobs quickly, let’s say you’re once or twice in a month, it ends up 20 jobs. The financials fall apart very quickly once you get over a certain [number of] jobs where you would’ve been better off buying an annual policy like what we sell.
Alex: And that $600 is basically for liability. But how about for the drone itself? Is that part of just the equipment policy that the member has?
Kevin: Yes. They just schedule it. They just schedule it for the replacement cost, and we just roll that into the camera equipment coverage.
Alex: So let’s talk about replacement costs. So say, for example, I’m a visual journalist, and I have $30,000 worth of equipment that I bought. And then somebody comes and steals all of it when I’m out shooting, and I don’t even realize it. And then I come to you and I file a claim. I know that insurance companies kind of do different things to value your loss. So how does it work with Lockton Affinity?
Kevin: So for us, you schedule your camera equipment. And something happens. It breaks. You drop it and it breaks, then after the deductible amount, you’re going to get a check for the replacement cost of the camera that you had scheduled with us. The only twist to that is if you don’t schedule the equipment on our policy, and this is what some other carriers, unfortunately, don’t tell you, is you have to make sure you’re asking questions or be upfront about the fact is there depreciation applied to my equipment. So for us, as long as you schedule the equipment, then it’s covered on a replacement cost basis.
So you got a brand-new camera that you had. But if it’s not scheduled, it’s on a depreciated basis. Which means it’s going to be depreciated whether it’s 10 percent or 40 percent% based on how old the camera equipment is. And so what we’ve seen is, sometimes people will come to us because they’re frustrated with their current provider or the provider they had. They thought they had replacement cost coverage, and it wasn’t made clear to them. Unfortunately, they had a claim, and when the claim was adjusted, instead of them getting back the $15,000, they only got back $8,000. And they were expecting to get back the full $15,000.
Alex: And when you say scheduled, what do you mean by that? Do you mean basically just itemized and sent in?
Kevin: Yes. It’s just itemized, so when you go on to the application, we have a section on there when you provide us with the information on your equipment. This is the year, model, make and the cost.
Alex: Is equipment covered in cases of war or natural disaster?
Kevin: So for a natural disaster, yes. Tornado or flood, something like that is covered on the inland marine piece of it. We outline that in our policy. For war … it’s a little bit more difficult to answer just because there are certain countries where you can’t sell insurance.
Alex: There’s another question that I had that really is something that most people don’t think too much about, and that is about issues visual journalists stumble into such as areas of privacy or copyright infringement where basically an image was used by a publication. And they accused you of basically invading privacy, or they accused you of making them look bad. That or it infringes on the copyright maybe of a building, for example, that they didn’t get the proper model release for. Is it standard for most insurance companies?
Kevin: Most insurance companies have exclusions for copyright on a general liability policy. There are other policies available out there, but the most commonly used name is media professional liability or media liability policy. There’s a lot of different components to that coverage. Most of which cover the scenarios you laid out.
Alex: So media liability, I would think, should be a standard thing for most people and for their organization.
Kevin: Yeah. I would agree with you. Unfortunately, I would say less than 1 percent of people are buying that. That’s not only your association from a photographer standpoint, but also for similar individuals in the photography industry. People just don’t see the need.
Alex: Is that expensive? How much does it generally run?
Kevin: The last policy I saw was $1,500 for media professional liability on an annual basis. And I think people see that, and they are willing to risk it. I haven’t had any issues. I’m very conscious of and I look at my stuff. I’m protecting my stuff. I’m going to risk it. So they’re making a business decision.
We see the exact same thing on cyber liability. A lot of people aren’t buying the cyber liability. They don’t understand what it is. They think it’s too expensive. They think they have their information secure. And then when they have a situation where someone hacks in or uses ransomware and makes them pay money or crashes their system, they’re embarrassed by that because they didn’t have control of the place. And they never really talk about it.
Alex: So explain to me a little bit about cyber liability.
Kevin: Cyber liability has been around for years. It started off being very expensive and has changed to where it’s very economical. We have various levels of cyber liability from everyone, from standard carriers like AIG and Hartford to very specific cyber policies with Lloyd’s of London. What that covers is if someone were to hack into your computer system, steal data or cripple your systems to where you can’t work because your system has a virus now. I mentioned ransomware. That can involve you or an employee clicking on an email they shouldn’t have, and then all of a sudden you get a screen that pops up and says your system’s been compromised. An example is a demand for you to pay $5,000, and then they will unlock your computer/software system. If you don’t pay the $5,000, unless you’ve got a really, really good IT person, your system is basically gone at that point.
Another piece, probably the biggest piece right now where we’re seeing claims on cyber liability, is what’s called social engineering. You see that more on professionals like accountants, investment advisers, lawyers, where there’s an exchange of money. And so you may have someone who sends an email from a known email address, “I need you to wire this much money,” they’ve gone in, they’ve hacked into Kevin Johnson’s email. So I’ll say it’s [email protected]. They hacked into it. Then I send an email; it looks like it’s from me. However, my investment buyer says, “OK, I’m going to move $1,000 over to this account.” They’ve created a dummy account. They move the $1,000 over. The investment adviser thinks they did what I asked them to do. And then through social engineering, someone just made off with $1,000. It happens on a daily basis, unfortunately.
Alex: On a business forum that I moderate, one of the questions is, “Where do I look for liability coverage for an Everglades photo workshop riding an airboat in the swamp filled with alligators?” So what about photo workshops? A lot of photographers and videographers are doing that nowadays.
Kevin: The workshops are not an issue for our program, and we have been insuring them for quite some time. That one obviously is an extreme example, which is fine.
But let me answer in two parts. Is this your workshop? Or are you trying to show people how to get the shot? How to do this type of work? Basic things. Those don’t bother us from an insurance standpoint using the carrier that we have. If it’s an extreme example like what you just gave, we would go out and we would utilize probably Lloyd’s of London or some other markets and get that person liability quotes for them. It’s obviously going to be much more expensive than someone who’s doing a run-of-the-mill workshop. But there are people who will provide quotes on that.
Alex: Well, I mean, I think you really don’t want one of your students to be eaten by an alligator.
Kevin: Yeah, I would agree with that.