7 Mistakes Rookie Art Collectors Make
By: Adrienne Reid, Vice President at Huntington T. Block Insurance Agency, Inc., a division of Aon
Making your first art purchase is an exciting moment. You may not even have realized that it was your personal starting point of a lifelong love of collecting. Each new purchase brings life to your collection and continues to shape your vision. And before you know it, you have an art collection. However, new collectors, by virtue of being new, are prone to making mistakes when they first start out, especially if they aren’t knowledgeable about the process.
Here are seven common mistakes new collectors make – that are easy to avoid – if you know what to watch out for:
1. Inadequate (or nonexistent) inventory. Many beginning collectors don’t have a thorough inventory of their collection or even forgo creating one altogether. An inventory catalog doesn’t have to be complicated. In fact, it can even be a simple spreadsheet with basic information on the artworks, when and where purchased, purchase receipts, where it is now located, and its value. Having this information about each item in a collection pays huge dividends as a collection grows and eventually when you need to get an updated appraisal. An organized inventory also helps with insurance; not having one clogs up the process of getting a quote for coverage to keep your collection protected.
2. Thinking of art simply as an investment. There is a lot of hype around art as an investment tool. While technically art is and can be an investment, it is a difficult and risky asset, especially for an emerging collector. If you buy a piece and try to sell it in only a few years, you’re not likely to get much return on the investment. The reality is it takes many years to realize sizable appreciation for the average emerging collector. What is important is making sure that you are buying art because you love it, not just as a financial tool.
3. Not using proper installation hardware. While it is easy to get out a hammer and nail and quickly be done with hanging a new piece of art, this is strongly inadvisable for a new collector. Our team sees a lot of claims – approximately 10 percent! – come in where art falls off the wall and is damaged. It sounds simple, but many new collectors forget that they should have the right hanging hardware that is graded for the weight of their new piece and that using a professional art installation crew is best practice to ensure it is properly installed. It’s also important for new collectors to be mindful of placement to avoid accidental knocks.
4. Not getting updated appraisals. Like ongoing, routine maintenance for your car, you want to keep updated records on your art collection. Our team recommends that you have an updated appraisal done every three to five years. An updated appraisal helps to ensure your work is insured properly. Also, going through the re-appraisal process may help you get organized about how you would like the art collection to be handled for estate planning purposes, which often isn’t something that an emerging collector thinks about.
5. Not properly insuring. Despite the precautions a new collector may make, accidents do happen and that’s when insurance comes into play. A new collector should make sure that their collection is protected either through a homeowner’s policy, renter’s policy, or ideally, a separate fine art insurance policy. A homeowner’s policy is a good starting point – but the coverage may not get you the amount of indemnity you would need for a loss. Therefore, we always recommend collectors consider getting a separate fine art insurance policy, which has very broad coverage, tailored valuation clauses, and specialized claims handling. Especially once the value of the collection goes above the value of your house, it is wise to get a separate policy.
6. Check the artwork’s provenance. Provenance is the record of who has owned the artwork prior to you, if you are getting a piece that isn’t directly from an artist’s studio. It’s imperative that new collectors check the provenance to make sure there is nothing questionable in the purchase. The gallery or art dealer will provide this information to you and help guide you on reviewing provenance.
7. Not using fine art shippers. Transit damage accounts for over 20 percent of fine art collector claims. Many of these damages could have been avoided if a fine art shipper was used instead of shipping art using an express shipper, which involves an extreme amount of handling and transfers. While it may require more time and extra cost, fine art shippers are well worth it when it comes to getting your art safely transported.
This article is provided for general informational purposes only and is not intended to provide individualized business, insurance or legal advice. You should discuss your individual circumstances thoroughly with your legal and other advisors before taking any action regarding the subject matter of this article. Only the relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured.