Insuring Your Art and Antiques
By Austin Kilham
The market for fine art and antiques is growing. Last year, global art and antique sales rose 8 percent to $65.9 billion, according to The European Fine Art Foundation’s 2014 report. Today, wealthy individuals globally hold nearly a tenth of their wealth, an estimated $4 trillion, in art and other collectibles, according to a 2013 Deloitte and ArtTactic study, so they have a greater need to protect their valuable acquisitions with the right insurance than ever before.
"A lot of people underestimate the value of the items in their home," says Anna Geisen, executive vice-president and managing director of insurance at BBVA Compass Insurance Agency. "For example, they may have a Persian rug on the floor they rarely think about that is worth $25,000. At the same time, clients often greatly overestimate the coverage provided by their standard home contents policy." The process of insuring your art and antiques starts as soon as you buy a piece. Following are the key considerations you’ll need to take into account to make sure you are covered properly.
Start with the right coverage
As soon as you make a new acquisition, you have important decisions to make. "As soon as you take title of the piece you are responsible for its insurance; it’s no longer covered by the gallery or auction house," says Susan Almrud, a private art advisor based in New York. If your purchase is worth more than a few thousand dollars, it’s likely that you will need to add coverage for individual items, a process known as scheduling. Scheduling allows you to add a rider to your insurance to make sure the item is specifically insured against all losses and damages.
"For high-net-worth individuals, the value of their collectibles often far exceeds the internal limits set for individual items within their home contents policy," says Geisen. "That is why fine art and collectibles riders that insure the replacement of a valuable, or the full value of that item if it is found to be irreplaceable, are so important."
To get coverage, you will need to provide the bill of sale to the insurance company. Make sure the piece is covered for all loss and damages, including fire, water damage, accidental damage and theft. For a $100,000 piece, adequate coverage could cost approximately $900 per year, says Almrud.
Also bear in mind that most damage to art and antiques happens during the moving process. Make sure works are covered during a move and that your insurance company knows when a piece is going to travel, including the initial move from the auction house or gallery.
Regularly review the value of your art and antiques
The value of art in particular can fluctuate: major museum retrospectives, monograph publications and the death of an artist can all have an impact on the prices of works, so regular appraisals are important to ensure they are properly covered. Many insurance companies will require that you work with an accredited appraiser. If the work is particularly valuable, your insurer may require a valuation from two different appraisers.
"In our annual review with our customers, we remind them to reassess everything in their collection, but we also offer services that allow them to record everything they own and account for the appreciation of those items," says Geisen.
In addition, consider requesting a clause in your insurance to cover 150 percent of the value of the piece in case it rises in value between appraisals.
Document your collection
Take photographs or videos of your art and antiques and keep all the paperwork related to its value, including receipts for the original sale, appraisal reports, documents of damage or repairs to the work, and documentation of taxes paid on the piece. Should you need to make a claim with the insurance company, this information can support your assessment of the work’s condition and potentially maximize the size of your claim.
Though you may buy art and antiques for the joy of collecting, it’s important that you apply the same rigor to protecting your pieces as you would to your other investments.
Austin Kilham is a freelance journalist who writes about personal finance and art. He lives and works in New York City.
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