Art Insurance—The When, Why, and How of Protecting Your Investment
Fine art is an investment worthy of protection. Much time, thoughtfulness, and expense goes into selecting pieces, and due to their one-of-a-kind nature, should be treated as such. However, new collectors don’t often understand the nuances of insuring art and either assume it is covered by a homeowner’s policy, or simply don’t investigate all that is involved in establishing a policy to protect these treasured possessions.
Determining the Need for Insurance
When one thinks of needing insurance, robbers in black masks involved in an international scheme may come to mind. However, there are many instances where insurance would protect your investment.
- Flood, fire, or other natural disaster
- Accidental damage (dinner party guest vs. sculpture)
- Loss (contractor laborer)
- Theft (break in)
- Damage or loss during transportation (largest risk to artwork)
- Terrorism (at one time an exclusion, but now a necessity)
Things like these can and will happen to collectors, and as much as you try to ensure your risk is low, there is always that chance. Even if your pieces are in a secure storage facility designed specifically for artwork, anything can happen. In fact, Fine Art Insurance company has reported that a mere ten percent of art is recovered after a theft; even if your art is not found, you want to be able to recoup its value in recompense.
Title insurance, insures against the title (or clear ownership) of the artwork. You will find insurance companies which specialize in this type of insurance. This protects you most importantly when the art changes hands by sale or estate proceedings, and more so with art which has passed through several owners. Additionally, if you would like to loan art to a museum for exhibition, you must be able to prove the title is good.
Property insurance, like a typical homeowner’s policy, protects against damage or loss. Your policy might cover a few pieces of art up to a limit (often not very high) minus the deductible. However, for valuable art and collectibles, your agent will likely offer a ‘floater’ to cover these assets as a supplement. For those high value collections, we recommend you consider a separate, specialized insurance policy, written by a company which specializes in collectibles, as it may be more affordable than you think, and also provide more comprehensive coverage.
Steps to Obtaining Art Insurance
First and foremost, you must have your artwork appraised. Without knowing the value, you cannot reasonably choose the right coverage. One detail of insurance not to forget is the right coverage; understand what the deductible is, and what dollar value has been placed on the work. Retail replacement value provides coverage for replacing the work in the case of a loss. The insurance company will have a standard for appraisal regularity. Since art can appreciate wildly, it is imperative that you discover (regularly) what the art’s value (and insurance level) has risen to. Additionally, a schedule of appraisals provides a history of increasing value in the case of a loss. Keep all appraisals (and certificates detailing ownership and authenticity) in a safe place in the event of a loss.
Bonus Benefits of Art Insurance
Specialized art insurance companies (or those who offer art insurance policies) are well-versed in the industry. Not only can they make accurate suggestions on coverage options, but have a network of other experts available. From experts on transporting art, and art framers, to interior designers and conservationists, they can introduce you to leaders in the industry who can support you in your collecting efforts.
Fine Art is an Investment
No matter what type of coverage you choose, remember that your art is more than an item of beauty; it is an investment which will increase in value, and something you can share with your heirs or, if you feel philanthropic, can be left to a charitable foundation or museum. As with any other investment, consider your individual risk and needs based on your specific display or storage situation.
If you are looking for advice, let Sybaris Collection do the work for you! Deeply rooted in the art industry, our free art advisory service can help determine what you are looking for, shop on your behalf, and share with you pieces we have discovered, along with the process of shipping, insurance, and displaying your newfound treasures. For those with a more discriminating taste, our ARTclub provides you with exclusive pieces offered only to members.