Business insurance

Three bad days

Picture three bad days. A visitor trips over our cable at a games festival and breaks a wrist. A hacker gets into the Garden Defense leaderboard. The studio laptop is stolen from a car.

The company's shield, limited liability, keeps the family's own savings safe from studio debts. But the company's own money is still at risk, and one big claim could empty the studio's bank account. Insurance is how businesses protect themselves from risks like these.

How insurance works

The company pays an insurer a premium, a regular fee, for a policy: a contract that says what is covered. If a covered loss happens, the company makes a claim, and the insurer pays, up to the policy's limit.

The company pays the first part of each claim itself. The US calls this the deductible, and the UK calls it the excess. Choosing a higher excess usually lowers the premium, but only choose one the studio could really pay on a bad day.

Four kinds of cover

• General or public liabilityPays claims when the business injures someone or damages their property, like the festival visitor. The US calls it general liability, the UK public liability.
• Professional indemnityAlso called errors and omissions (E&O). Covers claims that the studio's work had a costly mistake, like a broken build delivered to a publisher that breaks the contract.
• Cyber insuranceFor hacks and data breaches. It can pay to investigate, to tell affected players and to recover, and cover claims from others.
• Equipment coverLaptops, phones and test devices. A family's home insurance may not cover business equipment without an add-on, so check.

Policies come in many shapes, so always read what each one covers and what it leaves out.

When someone asks for proof

• Festivals and exposEvents often require exhibitors to carry liability insurance. GAMA Expo 2027, a tabletop game trade show, requires cover of at least US$1,000,000 per incident for every booth, with the venue and organiser named on the policy.
• PublishersA guide published by the IGDA, a game developers' association, says publishing contracts often require the developer to carry insurance, commonly errors and omissions.
• EmployeesMany places require insurance once a business has employees. In the US that generally includes workers' compensation.

Sometimes insurance is a requirement, not a choice. The proof is a certificate of insurance: a standard form from the insurer showing the kinds of cover and their limits.

Getting quotes with a parent

A broker works for the customer: they compare policies from different insurers and are usually paid a commission by the insurer that is chosen.

• List the studio's risks first. The US Small Business Administration's rule of thumb: insure against what you couldn't pay for on your own.
• Get several quotes. Compare limits, excess and exclusions (what is not covered).
• Answer the insurer's questions honestly. Wrong answers can mean a claim is refused.

A policy is a contract, so a parent signs it for the company.

In the company's name

The policy belongs to the company, not to a family member. The company is named as the insured, and the premium is paid from the studio's own bank account. That keeps the books clear and the company truly separate from the family, which keeps its shield strong (the Why a company? lesson explains the shield).

The two work together: the shield protects the family's savings, and insurance protects the studio's.

Bolt says: Premiums depend on the country, the cover and the risks, so ask a broker rather than guessing. That completes the Legal stage: the studio is official. Time for the boss quiz! After it, Stage 6 is all about how our games make money.