Art Insurance—The Protection You Hope You Never Use
“A beautiful body perishes, but a work of art dies not.”
- Leonardo da Vinci
Wild fires, hurricanes, earthquakes, floods, theft, vandalism, damage in transit… All sorts of nightmare scenarios haunt art collectors. Insuring your collection may not be as much fun as hunting for a new work of art, but it is a serious issue for devoted art lovers.
Replacing the Irreplaceable
Insurance is important because it helps protect your investment in art as well as the artworks themselves. Whether you collect contemporary mixed media, vintage photography, 19th-century bronze sculptures or mid-century modern painters, you’ve invested time, energy, passion and considerable money into building your collection. It makes sense to protect your assets whether the artwork proves to be of lasting historical importance or its beauty is purely of the moment.
Samuel Pugatch, Fine Arts Specialist, Momentous Insurance Brokerage, Inc., describes the role that collectors play as temporary guardians of cultural heritage.
“Protecting your investment and its value is certainly important. Perhaps more critical and definitely philosophical, is that most works of art existed and will continue to exist before and after a collector owns them. The collector is a steward of the art, helping to preserve works that have significant cultural heritage. I think it is important to protect the collection not only for the current owner, but also the future owners and patrons who will enjoy it.”
Insurance cannot replace a one-of-a-kind work of art, but it can help you rebuild or restore your collection after a disaster.
“Although most artworks are one-of-a-kind, the insurance payout gives you the means to purchase something of equal caliber to replace the piece you lost. If it is only a partial loss, then the insurance will pay for the restoration and associated costs, such as transit, storage and post-loss appraisals.”- Sarah Court, Director Global Fine Art Practice, Aon Private Risk Management Insurance Agency, Inc.
Conservators charge fees commensurate with their expertise in restoring damaged art, so the payout on an insurance policy may make a huge difference in your options “post-calamity.” Being able to hire a specialist in conservation after water damage is so much better than wading through the mud and wondering how to rescue the prize artwork in your collection. You’ll be happy to have the funds for the best available conservator.
In the case of a complete disaster—an artwork damaged beyond repair, destroyed or stolen—the payout may help you replace it with a comparable (or comparably valued) work of art. It’s not a magical solution that makes everything perfect again, but it is a great deal better than simply mourning your loss. Insurance is something you buy and hope you’ll never use!
Shopping for Art Insurance
Specialized art insurance has advantages over simply including your collection in your regular homeowners or renters policy. Factors include the overall value of your collection, the value of individual works and what the specific policy offers. It’s something best evaluated on a case-by-case basis. Some homeowners/renters policies offer sufficient coverage and some companies have extensive experience insuring art.
“There are times when the right homeowners/renters carrier is qualified to insure an art collection or other valuable assets regardless of value. Some of the higher end personal lines carriers have tremendous expertise and resources in the fine art world. …. The choice to use a specialized art policy depends on the broker; the company; the size, makeup and location of a collection; the loss history; existing relationships and personal experience.” - Samuel Pugatch
Like any other financial decision, it’s best to do your homework when buying insurance to cover your art collection. Katja Zigerling, Vice President, AIG, Art, Wine & Jewelry Insurance, Private Client Group, suggests three critical questions for insurance shoppers.
“1: Does the arts insurance policy provide coverage for catastrophic events such as earthquake, flood, hurricanes etc. 2: Is transit coverage included, and what are the geographic parameters of that coverage (i.e. is transit provided globally or just North America), 3: Does the insurance company have any art experts on staff to provide advice on risk management, loss prevention and who get involved in handling art claims…. A collector may ask a broker about some art claims they have handled to get a sense of their experience.”
Additional considerations are the company’s financial rating and stability, the speed of response in the claims process, and the flexibility the company allows the broker in developing custom policies.
Sarah Court advises art collectors to seek out an insurance broker with art experience. It’s the broker as “point person” approach to everything related to art insurance. While an insurance company rarely visits a collection before offering a quote, an experienced art insurance broker will view the collection on site, ask questions about the installation environment and perhaps make suggestions that could mitigate potential damage.
“The top fine arts insurers can only be accessed through engaging a broker. A good broker will review your personal situation and create a custom program that addresses these appropriately. They will ensure you have the best coverage for your needs at the most competitive price. They will also be the liaison for you with the insurance companies and all third parties brought into a claim, such as restorers, appraisers, shippers, storage facilities, and loss adjusters.” - Sarah Court
Feeling Secure in an Insecure World
A sense of security comes from knowing that you are prepared for whatever comes your way. In addition to getting your art collection properly insured, it’s important to have accurate, independent appraisals of your artworks and to review both the policies and appraisals on a regular basis. There’s no such thing as standing still in today’s volatile art world.