Having no insurance is not smart. Nobody does that. If nothing bad happens, you’re lucky but still not smart. If you have insurance and nothing bad happens – like almost everyone, almost all of the time – then you are paying the standard fee for protection and peace of mind. If/when something bad does happen, and your insurer pays the claim, you are made whole (financially) and you look really smart…or at least not stupid. If/when something bad happens and you don't have insurance, then you look bad and feel worse. You have a terrible loss and you might even owe someone else a big chunk of money. Worse still is having insurance, having paid the premiums, and then finding when something bad happens that your claim is not going to be paid, you will not be made whole. You look bad, feel worse, and maybe still owe someone else a big chunk of money.
That’s what happens when you have the wrong coverage. For art collectors, this is an all too common risk. The problem is that your friendly neighborhood insurance agent from the company with the funny television commercials knows nothing about art or the value of your collection. Hell, you probably don't know the value of your collection. What you do know is that you’re not a “Top 100 Collector” (unless you’re one of the three top 100 collectors who actually reads this blog). Why should you spend fancy money on fancy, art collector insurance? That's for fancy Sotheby's types.
As it turns out, the right insurance is usually not the cheap insurance. Even if you could get the right insurance from your neighborhood agent, you’re still going to have to pay what it costs, and you wouldn’t get the peace of mind. Ideally, what you’re paying for is peace of mind. Your risks with art are innumerable. Ignorance is not bliss. Expertise is what brings confidence and peace of mind.
Ignorance is not bliss. Expertise is what brings confidence and peace of mind.
The biggest percentage of art related insurance claims are due to breakage; falling off a wall, shelves collapsing, et cetera. A lot of bad things happen because art collections are displayed or stored in ways that increase the risk of loss or damage. So, hire professional art installers to hang valuable works of art. They'll know to use museum-quality hardware of appropriate size and weight for each piece. Extra caution should be used in high traffic areas, especially where grandchildren and pets may be present. Everyone in the house needs to know the importance of valuable pieces and special instructions on how to work around them. This applies to housekeepers, nannies, or other domestic staff in the house. Have fine art professionally moved when a handyman or painter is doing work.
Along with appropriate coverage, specialty insurers and brokers that represent them can offer a network of service providers to help collectors avoid and recover from loss: professional art shippers, appraisers, security experts, storage facilities, and conservation and restoration specialists – to name a few.
Another major cause of art damage is water. Definitely avoid displaying a valuable art piece underneath a bathroom on an upper floor. That’s probably not something you’re thinking about when deciding where to hang a painting or display a sculpture. More likely you'd be thinking about lighting or visibility. Do you know who else isn’t thinking about that? Probably your insurance agent.
Unfortunately, you cannot completely eliminate the risk of loss, so an up-to-date inventory and proper insurance are not optional. A proper inventory is the critical first step. You can’t properly insure a collection if you don’t know what's there and how much it’s worth. Also, it will streamline the process of settling a claim if a loss does occur. You’ll want to keep photos, receipts, expert appraisals, proofs of title, certificates of authenticity, and records of any restoration work. Inventories and appraisals should be updated regularly - every three to five years, or when you spend mega dollars on a new acquisition.
For insurance coverage, Valuables Policies, or ‘scheduling’ provides more relevant protection than the basic personal property coverage in your homeowners policy. Scheduling has no deductible. Losses due to flood are not excluded. Valuables policies from insurance companies that specialize in serving collectors and collectibles offer other advantages over the industry standard. If the value of a scheduled item unexpectedly increases during the policy term, they will often pay for its market value just prior to a covered loss, up to 150% of the scheduled amount. They include coverage for breakage of fragile art items, like a glass sculpture. If one item of a pair or set is lost, damaged or stolen, they'll reimburse for the set, as long as the matching items are surrendered.
An independent insurance agent or broker who understands the needs of art collectors and has access to the right carriers can be the difference between real peace of mind and a low-budget, potentially tragic, false sense of security.
William S Jiggetts