How to Protect Your Art Collection

How to Protect Your Art Collection

By Peter Letzelter-Smith

The first steps have been taken; you’ve transitioned from an art enthusiast to an art collector. No longer satisfied with lingering in the background at openings and auctions, you’ve now plunged into the world of art acquisition. A few pieces have been purchased—via auction or gallery—and they now take pride of place in your home.

The initial rush of the first few “buys” has abated, but the passion is still growing. It’s clearly time to get serious. And if you’re seriously beginning to collect art, then it’s time to seriously consider one of the more mundane aspects of your new passion: ensuring that your growing collection is properly insured.

Don’t assume your homeowners or rental insurance fully covers a fine art collection. Serious collections of art require sophisticated insurance policies, something of a higher order than common home and renter policies. Like many challenging endeavours, collecting art is not simply about being passionate; it is also about being thorough. Sweating the details. And there are no details to sweat in this world quite like the fine print of insurance policies.

If you find a good fine art insurance broker, you won’t have to do all the sweating by yourself. These specialized insurance agents know the art world and the insurance world and can be the point of communication between the two. A specialized broker can be a real asset as you become a more knowledgeable and sophisticated collector, including giving professional advice on the physical realities of protecting works of art and theft-protection strategies for your collection.

Fine art insurance covers two major aspects of mishaps that can happen to artwork: damage and full loss. Hopefully, if something disastrous happens to one of your pieces you’ll only need the first, which is insurance to cover the price of restoration. If a piece is damaged but can be repaired, then a good policy will cover all or most of the cost.

Art restoration is slow, painstaking work of a highly technical nature, so costs can be significant. And the fact of the matter is that for private collections—especially those whose home is shared by human beings (and their pets)—accidental damage is the more common type of insurance claim.

The sadder kind of insurance is triggered when a piece or—shudder—an entire collection is destroyed due to theft, fire, or other catastrophe. This insurance simply makes you whole on a financial basis for the monetary investment that has gone into your collection.

Prior to contacting an insurance provider, making an inventory of your collection is necessary. This isn’t too complicated but will be needed to carry on with the preliminary steps of getting insurance quotes.

The inventory will need to include the documentation that is the basis for your claiming ownership of your collection, such as bills of sale and provenance (the paper trail confirming the authenticity of works of art). Other parts of the inventory are estimates to replace the work, photographs of pieces, and the most recent appraisals for the collection.

It’s obviously a good idea to store this inventory in a place other than where the artwork is located. Bank safety deposit boxes are ideal, though there are cloud-computing solutions as well. For example, the US-based company Artwork Archive offers a “cloud-based art inventory system” for both artists and collectors.

If you have amassed more than just a handful of pieces and a thorough appraisal of your collection has never occurred, then that may be the next step in the process. Not only is a current appraisal important in the case of an insurance claim, but it can be an important part of tax and estate planning and the future sale of pieces from your collection.

Finding a professional appraiser who follows industry norms and whose work is recognized by other appraisers—they will be a member of one or more of the major art appraisal organizations, such as the International Society of Appraisers—is key. Art appraising is a very specialized niche and different appraisers specialize in different types of art, so expect to do some research and plan on sitting down with more than one appraiser before making a final decision.

As far as finding insurance coverage for your art collection, there are two main options. The first is to work with your current insurer and purchase fine art floaters for selected pieces in your collection or a blanket floater for the entire collection. This is a more likely option for smaller collectors. But not all home insurers offer such floaters and they may not be as price competitive or sophisticated as what can be offered by an insurance company specializing in art insurance.

There are many companies in the specialized art insurance marketplace.

• Operating in 26 countries, the largest is AXA ART, which has been insuring art collections for over 50 years.
• The Liechtenstein-based accurART Fine Art Insurance operates in much of the European Union.
• Greenfield is a leading art insurance broker in the United Kingdom, providing both independent floater policies for individual pieces or collections and as part of their home insurance policies.
• Also UK-based, Highworth not only specializes in insurance for art galleries, museums, and exhibitions but also offer policies to private art collectors.
• Huntington T. Block is one the oldest fine art insurance companies in the United States, operating since 1962, and is also an insurer of major art institutions.

These are only a handful of the largest and best-known companies that provide specialized fine art policies. Many major insurance companies also operate divisions that specialize in art coverage.

The bottom line is that if you’re taking the plunge into collecting art, then you’ll need to take the necessary steps to protect your investment. Talk to other collectors and do the research so you can find professionals and companies who you feel comfortable working with.

Sources:
“How to Insure Your Art Collection the Right Way,” Artwork Archive [blog], https://www.artworkarchive.com/blog/how-to-insure-your-art-collection-the-right-way

Fine Art Insurance, https://fineartinsurance.com/

Art-Collecting.com, http://art-collecting.com/index.htm