Art insurance is your defense against the unexpected. Like homeowners insurance or health insurance, although no one wants an earthquake or a broken leg–it’s imperative to be prepared. We consulted two art insurance specialists, and both had horror stories to tell. Things like pencils going through paintings and red wine glasses flying onto canvases. Interestingly enough, in each case the art collector came to the insurer after the incident looking for a restoration expert and art insurance coverage. The problem with getting a painting insured after a pencil rips a hole through it, is you won’t get a dime of reimbursement for the restoration or the lost value of your piece.
After speaking with Victoria Edwards of Wasserman & Associates Insurance Agency, LLC, specializing in fine art and jewelry insurance, and with William Fleischer of Art Insurance Now, we learned that art collectors need to be ready for anything.
Consider these questions as your starter kit to properly insuring your art collection:
1. Does My Homeowners Insurance Protect My Art Collection?
One of the first questions people ask is: "Does my homeowners insurance cover my artwork?" Homeowners insurance covers your valuables subject to your deductible and coverage limits.
“Some people think that their homeowners insurance will cover [fine art],” Edwards explains, “but if you don’t have a separate policy, and think it’s covered under your homeowners insurance, you need to check the exclusions.” It’s possible to buy special coverage for specific items such as pieces of art, which would cover them for their most recently appraised value. This is something you need to do your due diligence on as an art collector.
“A homeowner’s policy is normally not as sophisticated as a specific fine art insurance policy,” Fleischer explains. “They have a lot more restrictions and a lot more underwriting. As the art market has gotten so much more sophisticated, a homeowner’s policy is not the ideal place to put your coverage.”
2. What are the Advantages of Working with a Separate Fine Art Insurance Company?
“The advantage of working with a broker who actually specializes in fine art insurance is that we work on behalf of the client and not the company,” Edwards clarifies. “There is a personalized attention when working with a broker who is working on your behalf.”
Art Insurance specialists are also more experienced in creating policies to protect your art collection and knowing how to help in claim situations. When you make a claim with an art insurance specialist, you collection is going to be taken very seriously. With a common homeowner’s insurance policy, your art collection is nothing more than a part of your valuables. “A specialty art insurance company focuses on the art,” Fleischer says. “They understand how the claims situation is handled, how the appraisals work, and they understand the movement of an art piece.”
Like any insurance policy, be cognisant of what is covered. Some personal policies exclude restoration. Meaning that if your piece is harmed (think: red wine flying at a canvas) and needs to be repaired, you will be responsible for the cost. If you need to send a painting to a conservator, the value may reduce. Fleischer also notes that an art insurance policy will give you the reduction of market value if that is included in your coverage.
3. What’s the First Step in Insuring My Art Collection?
The first step to insuring your art collection is putting together provenance, or all the necessary documentation to prove that the work of art is yours and what it’s currently worth. These documents include proof of ownership, bill of sale, provenance, a replacement estimate, photographs and the most recent appraisal. You can store all of these documents in your Artwork Archive profile to keep things organized and easily accessible in the cloud. The frequency that you should update your appraisal documents is subject to each company’s underwriting philosophy.
4. How Often Do I Need to Schedule an Appraisal?
Fleischer suggests having an updated appraisal once a year while Edwards suggests every three to five years. There is no wrong answer and the appraisal frequency is heavily dependent on the age and medium of the piece. These are questions you can ask your insurance representative. Although sometimes it can be as easy as sending over the invoices, generally you want an updated value from the past few years. “Maybe [the piece] was originally $2,000,” Edwards suggests “and five years from now it’s $4,000. We want to make sure that in the event of a loss, you get $4,000.”
If you are scheduling an updated appraisal, specify that it is for insurance purposes. This will give you the most up-to-date market value of your piece. Not only is this important for insurance, but is necessary for planning your estate, analyzing the overall value of your collection, filing your taxes, and selling artwork.
5. How Can I Keep My Provenance and Appraisal Documents Timely for My Coverage?
When you’re consistently adding pieces to your collection and updating your appraisal documents, it’s important to stay organized. An archival system like Artwork Archive is a great way to keep everything you need in one easy-to-find place that you can access anytime, anywhere. “Your website is perfect.” Edwards says. “As far as being able to allow your clients to pull out descriptions and values and say here is a list of things I want to insure, it will make it very easy.”
Having all your documents in one place allows you to properly manage the value of your art collection. Accurate information also makes you a lower risk within your insurance policy.
6. What Are the Most Common Claims?
The most common claims between both Fleischer and Edwards are theft, robbery, and art getting damaged in transit. If you are moving or loaning part of your collection out to museums or different venues, make sure your art insurance broker is aware and a part of this process. If the loan is international, be aware that insurance policies vary from country to country. “You want to make sure there is door-to-door coverage,” Edwards says, “so when they pick the painting up at your house it is covered in transit, at the museum, and in transit back to your home.”
Don’t Wait to Mitigate Your Risk
The best way to be sure that your insurance policy covers everything you need is to call your local broker, or start calling potential brokers and ask questions. “Ignorance is not a defense,” Fleischer discloses. “Not having insurance is a risk,” he continues, “so do you take the risk or hedge the risk?”
Your art collection is irreplaceable, and art insurance protects your assets and your investment. It also ensures that, even in the event of a catastrophic claim, you can continue collecting. “You’re never expecting something to happen,” Edwards warns, “having insurance gives you peace of mind.”