The Essentials of Protecting Your Art Collection with Art Insurance
May 31, 2023
Art can be an investment, a passion, and often, a reflection of the collector's personality. The art market's global nature and its fast-paced changes make insuring these valuable items more complex. Here are some steps to choose the right art insurance policy for your collection, and the role of a qualified appraisal in the process.
1. Understand the Art Insurance Basics:
Like other insurance, art insurance is all about managing risk. Your artwork may be exposed to various risks, including damage, theft, or loss during transit. A good insurance policy can offer protection against these risks. However, unlike other forms of insurance, art insurance often requires specialist knowledge due to the unique nature and often high value of the items insured.
2. Appraise Your Art Collection:
The first step towards getting the right insurance is to know the worth of your collection. Engage an independent professional art appraiser to determine the current market value of your artwork. This appraisal forms the basis of your insurance coverage.
Remember you are getting an appraisal for the intended use of gaining insurance coverage in the case of loss or damage. The value being sought here is replacement value, so you can go out and replace the work with a comparable one in a reasonable time frame. If planning to sell an item be aware that an insurance appraisal report does not usually reflect the potential sale value.
Should you need an appraisal report, hire an appraiser who is USPAP-compliant and has expertise in your item type. Appraisers can be found through professional organizations such as the International Society of Appraisers (ISA), Appraisers Association of America (AAA), and American Society of Appraisers (ASA).
3. Understand Your Current Coverage:
Examine your current insurance policies, like homeowners or contents insurance, to see if they provide any coverage for artwork. If the policy offers only limited coverage or places strict limitations on claims for artwork, you may need to consider additional, specialist art insurance.
High-value items often require appraisals for insurance coverage. This is determined by your policy's scheduling threshold - the minimum value an item must have to require an appraisal report for insurance protection. Lower-value items might fall under blanketed coverage, which offers protection for multiple items under a single policy.
It can sometimes be beneficial to mix both blanketed and scheduled coverage. Higher-value items should have scheduled coverage, which pays for the full retail replacement value if lost, while lower-value items can be covered under blanket insurance.
4. Compare Insurance Providers and Policies:
Not all insurance providers or policies are equal when it comes to insuring art. Some providers specialize in art insurance and may provide more comprehensive coverage and expertise than standard insurance providers. Compare different policies, consider their coverage limits, exclusions, and the cost of premiums. Pay attention to how they handle claims and whether they have expertise in art insurance.
5. Consider Your Art Lifestyle:
Different collectors have different needs. If you frequently loan artwork to museums or galleries, transport artwork for exhibitions, or buy and sell artwork regularly, you'll need a policy that covers these activities.
6. Make Sure You are Covered for the Replacement Value:
Some policies may specify a different value, such as “actual cash value”, which is a much lower amount than replacement cost. You want to be sure you are covered for the retail replacement cost so you are able to be made whole in the case of loss or damage.
7. Periodically Review and Update Your Policy:
Art values can fluctuate over time, and your collection may also change as you acquire or sell pieces. Regular appraisals and updates to your policy will ensure that your coverage remains adequate.
8. Work with an Art Insurance Specialist:
Art insurance can be complicated. A specialist broker can help navigate the complexities of insuring your artwork and ensure that you get the best coverage for your specific needs.
Remember, the goal of insuring your art is to ensure that you are financially protected if your artwork is damaged, stolen, or lost. The right insurance policy will give you peace of mind and allow you to enjoy your collection without worry. Don't wait for an unfortunate event to remind you of the importance of good art insurance coverage. Plan ahead, do your homework, and secure your valuable investments.
If you think you need to gain insurance or update your insurance to be adequately covered, grab this checklist of what you need to prepare before an appraisal by filling out the form below:
