Tips for Insuring Art in Case of Theft or Damage
Insuring your work of art is important for the security of the work and your peace of mind should anything happen to it. Insurance depends on your company and policy but there are three types of art insurance coverage that will protect a work of fine art: Title, Property, and Homeowners. Title insurance insures against a defective title, meaning that the artwork was not stolen or looted. Property insurance is similar to homeowner's insuring against theft or damage but with higher coverage and is also known as a personal articles floater. Homeowners insurance is an overall umbrella policy that protects against any damage or theft that occurs in the home. It is important to note that if you do protect your art under the homeowners policy it can have certain limits that a homeowner might not be aware of, so you will always need to discuss the value of your collection with your agent.
It is also good to know that insuring the value of an entire collection is not always necessary as insurance covers "incidents," not specific works of art, unless the insured specifies individual coverage for specific works of art in the policy. As an example if you purchase property insurance, you're insured for the coverage amount no matter what gets stolen. You may not recoup the entire amount of the loss, but at least you'll have something. When purchasing a policy it is always important to talk to your agent to figure out the best policy for you as it is all about receiving compensation for a theft or damage that counts, and using that compensation to either: recover the art if stolen, conserve it if damaged, offset the loss in revenues by purchasing a new work, or create stronger protection for the remaining artwork with the settlement.
Here’s What You Should Know
* Photograph and document what you deem valuable in your art collection. Include current appraisals, original sales receipts, and any additional paperwork that validates the value of your art.
* Work with an insurance company that has experience and specializes in insuring art. They understand how the art world works, how to value art and how to reach reasonable settlements. (These are the companies that provide the personal articles floater which is an entirely separate policy from the homeowners to specifically protect the collection which has higher coverage limits for a greater number of perils.)
* Purchase the insurance you are comfortable with, whether or not that amount covers the entire value of your art. Most loss, damage, or theft affects only a portion of a collection, not the entire collection.
* Make sure you understand your insurance policy by reading the fine print and asking questions. Never be embarrassed to have a conversation with your agent, they are there to assist you. The more you know, the better able you both will be in addressing your concerns and needs. Not to mention the better understanding you will have should something happen.
*If you feel like you are not properly covered under your existing home or renter's policy for your art, schedule an endorsement which will increase the basic coverage limits for your art collection to a higher limit that will fully protect you.
Note on Appraisals
Insurers expect clients to appraise their works every three to five years. When getting a work appraised for a value or documentation of ownership to use for insurance purposes be sure to find a qualified appraiser that is certified through an appraisal organization and operates under Universal Standards of Professional Appraisal Practice. One can be found here at the American Society of Appraisers.
In the event of a claim, some policies reimburse the appraised value while others pay the greater of the appraised value and the market price, sometimes capping reimbursement at 150 percent of the appraisal if it has not been renewed recently.
The premium value of insured art globally was somewhere between $500 million and $1 billion in 2013. Per Forbes (That's way below what it should be people...)
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