By Hope Wolman of Insurance Office of Central Ohio
There are many reasons, and these apply not just to art, but to silver, jewelry, musical instruments, wine and many fine things. We like to think about caring for your art and fine things, just like caring for your home. These things have significant value, and need a bit of attention. For our purposes today Coco, I will just address art.
1. Most policies have limits on what you can recover for certain classes of property. Any many policies have exclusions for the breakage of fragile articles. So if you spend money on buying art, you want it protected; you don’t want to have a loss that is unrecoverable. Moreover, insuring certain art often costs less than insuring general contents.
2. Even if you personally didn’t buy the art, if you ever go to sell the family heirloom through auction or public channels, it will be reported. The IRS is alert to this. And the seller is liable for past taxes, as far back as the acquisition date. So in the meantime, if you perceive it has value, like any other asset, you should take measures to preserve that value. That said, you should definitely confirm all this with a lawyer.
3. In the event of damage to your art, some policies cover restoration and repair. These costs can be considerable. Additionally, one can pursue a claim for diminution in value.
HOW DIFFICULT IS IT TO INSURE MY ART?
It’s quite simple. But first, and this is important, you need to make sure you are dealing with an agent that really knows about insuring art. This is critical as there are differences in the valuation basis, and the amount and scope of coverage. The coverage amount is addressed either with blanket protection for smaller value items or by itemizing individual pieces with higher values. Conveniently, appraisals aren’t required by most carriers until you get beyond $25,000 in value. Periodic appraisals, as well as tracking art auctions and gallery sales, are a good way to track the appreciation in your collection.
Savvy buyers will discover that even if their initial coverage allows for some upside protection, the appreciation will soon outpace that cushion, and there will be a need to adjust coverage. As problems go, this is a nice one to have.
WHAT STORIES CAN YOU SHARE?
Two come to mind.
Earlier this month, we did an event at the Columbus Museum of Art about the financial and physical protection of collections. The very next day, the Art Loss Register announced a theft of a multi-million dollar collection of Warhols from a Los Angeles residence. These things do happen!
That said, you don’t need a wall of Warhols to be risking the security of your fine things. One of our clients had some very large format modern works that were damaged in transit. Anxious about future damage, our client wanted the works restored in the residence, and not transported for conservation. We did some research and located an excellent conservator who was willing to set up camp in the insured’s residence. We moved the furniture and converted the dining room into a studio, complete with cameras, heat lamps, paint, saw horses, dryers, etc. When completed, we had a delighted client and successfully preserved the art. And the insurance carrier paid for it.
After the work was repaired, we pursued a claim for the diminution in value. The client was completely surprised by how large the decrease in value was, and the client, though would have preferred not to have gone through this, is even more convinced that insuring a collection is smart and worthwhile.
Hope Wolman is an Agent at Insurance Office of Central Ohio, where she specializes in demystifiying insurance for high net worth individuals with market insights in protecting fine arts, jewelry and other collectibles. She is focused on making insurance as user-friendly and transparent as other financial services. She has a Bachelor of Arts from Harvard College and an MBA from the Kellogg School at Northwestern.
Hope can be reached at firstname.lastname@example.org.