FINE ART INSURANCE: Coverages, Policies and Best Practices

Fine art Insurance

Art sales worldwide increased during the global economic recovery following the global financial crisis in 2009. For the past decade, the worldwide art community has been expanding, necessitating a greater demand for specialised art insurance policies for collectors.
Fine art insurance is one of these specialised covers. A fine art insurance company or broker provides collectors with important financial protection in the event that their art investment is lost, stolen, or damaged. The specialised all-risk policy extends beyond a standard household property policy and is frequently founded on the idea that owners desire to conserve things or collections for future generations of family or community.

Art Insurance Provides Protection Against the Unexpected

Although no one wants an earthquake or a broken leg, it is critical to be prepared, just as it is with homeowners insurance or health insurance. We spoke with two art insurance specialists, both of whom had horrible stories to tell. Things like pencils flying through paintings and red wine glasses flying across canvases are examples of this. Surprisingly, in each case, the art collector contacted the insurer after the occurrence in need of a repair expert and art insurance coverage. The difficulty with insuring a painting after a pencil tears a hole in it is that you won’t be reimbursed for the restoration or the lost value of the piece.

What is Fine Art Insurance Supposed to Cover?

Most fine art plans will cover ‘all hazards,’ which is a little misleading because coverage exclusions are almost always present. All insurance will cover risks such as fire and theft, as well as loss of value and accidental damages. War, nuclear weapons, moths and vermin, and intrinsic vice are examples of typical policy exclusions. Keep in mind that not all insurance policies cover fine art.

We learned from Victoria Edwards of Wasserman & Associates Insurance Agency, LLC, which specialises in fine art and jewellery insurance, and William Fleischer of Art Insurance Now that art collectors must be prepared for anything.

Consider the following questions as a starting point for properly insuring your art collection:

#1. Is my homeowner’s insurance going to cover my art collection?

“Does my homeowners insurance cover my artwork?” is one of the first questions people ask. Homeowner’s insurance covers your assets up to the limits of your coverage and deductible.

Some people think their homeowner’s insurance will cover [fine art], but Edwards advises looking at the exclusions if you don’t have a separate policy and think your homeowner’s insurance will cover it. It is possible to purchase additional coverage for certain goods, like art, that would cover them for their most recently appraised worth. As an art collector, you must conduct thorough research on this.

“Normally, a homeowner’s policy is not as sophisticated as a specific fine art insurance policy,” Fleischer notes. “There are a lot more limits and underwriting.” Because the art market has become so complex, a homeowner’s policy isn’t the best location to put your coverage.”

#2. What are the Benefits of Using a Separate Fine Art Insurance Company?

“The benefit of working with a broker who specialises in fine art insurance is that we work on behalf of the client, not the company,” Edwards explains. “When you work with a fine art insurance broker that works on your behalf, you get customised attention.”

Art Insurance specialists are also more knowledgeable in developing insurance to protect your art collection and in assisting with claims. When you file a claim with a specialist in art insurance, your collection will be taken very seriously. With a standard homeowner’s insurance policy, your art collection is treated as one of your possessions. “A specialised fine art insurance company concentrates on the art,” explains Fleischer. “They understand how the claim scenario is handled, how the assessments function, and how an art object moves.”

Be aware of what is covered, just like you would with any insurance policy. Some personal policies might not allow for restoration. That is, if your piece gets damaged (for example, red wine flying at a canvas) and needs to be restored, you will be responsible for the cost. The value of a painting may decrease if it must be sent to a conservator. Fleischer further mentions that, if it is included in your coverage, a fine art insurance policy will provide you with a reduction in market value.

#3. What Is the First Step in Getting My Art Collection Insured?

The first step in insuring your art collection is to gather provenance, or all of the papers required to verify that the work of art is yours and how much it is currently worth. Proof of ownership, a bill of sale, provenance, a replacement estimate, pictures, and the most recent appraisal are among the documents included. To keep everything organised and easily available in the cloud, you can save all of these papers in your Artwork Archive profile. The underwriting strategy of each fine art insurance company determines how frequently you should update your appraisal records.

#4. How Frequently Should I Schedule an Appraisal?

Fleischer recommends having an appraisal revised once a year, whereas Edwards recommends every three to five years. There is no correct answer, as the frequency of appraisals greatly depends on the piece’s age and medium. You can ask your insurance salesperson these questions. Although it is sometimes as simple as giving over the invoices, you normally want an up-to-date value from the last few years. “Perhaps [the artwork] was initially $2,000,” Edwards speculates, “and in five years it’ll cost $4,000.” We want to make certain that you receive $4,000 in the event of a loss.”

When scheduling an updated appraisal, make it clear that it is for insurance purposes. This will provide you with the most recent market value for your piece. This is crucial not only for insurance purposes, but also for estate planning, determining the overall value of your collection, filing taxes, and selling artwork.

#5. How Can I Ensure That My Provenance and Appraisal Documents Are Received in Time for My Fine Art Insurance Coverage?

It’s critical to stay organised when you’re constantly adding pieces to your collection and updating your assessment documents. An archiving system, such as Artwork Archive, is a terrific method to save everything you need in one easy-to-find location that you can access at any time and from any location. “Your website is flawless.” According to Edwards. “It will make it extremely straightforward to allow your clients to take out descriptions and values and say here is a list of things I want to insure.”

Having all of your paperwork in one location allows you to manage the value of your art collection effectively. Accurate information also reduces your risk under your insurance policy.

#6. What Are the Most Common Types of Claims?

The most frequent accusations made by both Fleischer and Edwards are theft, robbery, and art damage in transit. If you are relocating or lending a portion of your collection to museums or other locations, make sure your fine art insurance broker is informed of and involved in the process. If the loan is worldwide, keep in mind that insurance plans differ from one country to the next. “You want to make sure there is door-to-door coverage,” Edwards advises, “so that when they pick up the picture at your house, it is insured in travel, at the museum, and in transit back to your house.”

What Is the Purpose of Fine Art Insurance?

Fine art insurance is required if and only if the following conditions are met:

  • You own art worth more than £100,000
  • You have an art collection that you inherited.
  • You’ll want to show off your art rather than put it in a safe.

A conventional home contents insurance policy will not cover your art collection.

What Does a Fine Art Insurance Policy Cover?

Fine art insurance can be customised to your specific needs and collection, however, it will usually include the following:

  • Cover for accidental loss and damage
  • ‘All risks’ global cover
  • An agreed-upon price
  • Compensation for any loss of original worth as a result of damage, as well as the cost of restoration
  • Following a claim, you have the option of receiving cash or a replacement.
  • Set replacement, with the option of paying the full replacement cost if a piece is destroyed
  • A percentage increase if the creator dies and the value of art rises.
  • You only need to specify a work of fine art on your insurance policy if the article limit is greater than £25,000.

What Kinds of Objectss are Covered by a Fine Art Insurance Policy?

fine art insurance
Source: Open Pr

Each carrier’s tolerance for risk will determine this. Prior to its merger with global art insurance leader AXA, XL Catlin explained in its ‘Introduction to Fine Art Insurance’ that “art and artefacts worth insuring under a fine art policy come in numerous classifications.” They might be as small as snuff boxes and pennies or as large as large canvasses and towering sculptures.

They can be fashioned of precious metals, precious stones, or common materials such as paper or clay. They could be made of stone, metal, or even liquid. Some are antique, while others are the work of contemporary artists.” All of the eligible objects have one thing in common: their value “extends well beyond an ordinary function or material,” according to the carrier. While this is subjective in the art world, a collector may require a fine art policy if they have:

  • A one-of-a-kind item that will be difficult or impossible to replicate
  • A group of objects whose worth would decrease if one of them were damaged or lost.
  • Works of art that they loan to museums or exhibits
  • Valuable objects are kept in storage.
  • Items that are fragile, delicate, or very old and original

How do Insurers assess the Worth of Pieces of Fine Art for Insurance Coverage Purposes?

As previously said, the value of artwork can be highly subjective at times. Carriers typically base premium calculations and claim payouts on the following:

  • Auction price or market value at the time of loss
  • The cost of purchasing
  • Replacement cost estimate
  • Declared worth (must be subject to regular appraisal)

Don’t Put Off Risk-Reduction Measures Any Longer.

Phoning your local fine art insurance broker or starting to call possible brokers and asking questions is the easiest way to ensure that your insurance policy covers everything you need. “Ignorance is not an excuse,” Fleischer admits. “Because not having insurance is a risk,” he continues, “should you take the risk or hedge the risk?”

Your art collection is priceless, and art insurance safeguards your assets and investments. It also assures you that you can continue collecting even if your claim is catastrophic. “You never expect something to happen,” Edwards advises, adding that “having insurance provides you peace of mind.” Keep what you love secure and cherish it.

Fine Art Insurance FAQ’s

How do you insure art for shipping?

Pack tightly, but not so tightly that the art is put under undue stress. Shake your package before and after sealing it to ensure that nothing is loose or moving about. If something is moving now, it will only get worse after the box is on its way. Always shake before sending.

Do artists need insurance?

The quick answer is yes. An ACT Insurance policy boosts your credibility and establishes you as a professional. Artists, on the other hand, require insurance for a variety of reasons. If you take your art to exhibits and fairs, directors will often require you to obtain liability insurance and add them as additional insureds.

What type of insurance do artists need?

Artists should have three forms of insurance: health, liability, and property.

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Artists should have three forms of insurance: health, liability, and property.

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