It May Be Art, But Is It Properly Insured?

insurance for your collectibles

A good friend of mine has said for years that “business is all about expectations”.  I couldn’t agree more.  I think that adage also applies to insurance.  The coverage your policies provide was established when you originally applied for the policy or from a review meeting with your agent/broker.  Is it reasonable to expect our insurance policies to anticipate all of the changes in our lives?  Probably not!

Problems arise when, at the time of a claim, the settlement offer from the insurance company doesn’t meet our expectations.  While most buyers of insurance understand the general coverages provided for their home and their contents, misconceptions exist regarding proper insurance coverage for art & collectibles.

Many people collect paintings, sculptures, antiques, and other works of art with values ranging from garage sale prices to thousands of dollars. The International Risk Management Institute states that art becomes valuable for one of three reasons: cultural significance; owner’s subjective value; or the marketplace’s estimate of its worth.  Regardless of the reason, damage to a valuable work of art will likely cause the owner significant financial loss.

A standard homeowner’s insurance policy provides some coverage for fine art but is unsuitable for high-priced works.  A fine arts insurance policy is the better way to protect your valuable items.  The key difference between a homeowner’s policy and a fine arts or collectibles policy is the optional protection for replacement (for a total loss), restoration (for a partial loss) and loss of value (should a covered repair reduces the market value of your item).

Some considerations for insuring your fine art:

  • Have an appraisal and be prepared to have this updated on a fairly regular basis (at least every five years). This can protect you against fluctuations in the market value of your items.

  • Consider Title insurance. While this article mostly deals with property coverage for your artwork, title insurance can protect you in case your item was stolen or looted before you bought it.

  • Will your artwork leave your home? If so, make sure your agent/broker extends coverage while it is in transit

  • Will your artwork be exhibited? Most policies will rely on the exhibition venue to protect the artwork while at their premises.  Have this discussion with the venue before transporting.

  • What deductible options are available? This can be an effective way to manage your cost of insurance.

  • Keep documentation organized: proof of ownership/provenance, appraisals, receipt of purchase/bill of sale and photographs of each piece are important to maintain.

So now ask yourself, is the artwork you own property insured?  If your answer leaves you with anything less than a comfortable feeling, it’s time for a conversation with your agent/broker.  Remember, the coverage you have today is based on your situation at some time in the past.  Conditions change and so should your insurance program.   A simple conversation can go a long way to ensure expectations are met!