Blog The Fine Art of Insuring Fine Art and Collectibles

The Fine Art of Insuring Fine Art and Collectibles

It’s an unfortunate fact of life, but pets have been known to damage priceless 19th century Oriental rugs, children have “embellished” valuable paintings with their crayons creations, priceless vases do get knocked over and climate control systems can fail, damaging vintage wines. These are the everyday perils of living alongside valuable art and collections – and the reason why you might want to give consideration to insurance issues.

A work of art is simply something with perceived artistic value. Therefore it is quite possible that nothing is more valuable to you than your young child’s latest art project, proudly and prominently magnetized to the front of the kitchen fridge. But should you insure it?

As sentimentally meaningful as it is to you, it’s pretty unlikely that you could benefit monetarily from its sale – not that you would ever think of doing so! This criterion – the willingness of the market to pay for any specific article – establishes the economic worth of art and collectibles. Be it a painting, sculpture, vase, figurine or other artistic piece, it may have a financial value, and it is important that you be aware of the magnitude of its potential worth. In fact, today we should even consider the value of “new works of art” such as photography, films, performance art, video art and various collectibles such as dolls, watches and stamps. But how does one know whether the curious collection of miniature portraits bequeathed by Aunt Millie 15 years ago – and stored in the attic ever since – is worth anything, let alone worth insuring?

In praise of appraisals

Over the years, art prices have soared, increasing more than 20-fold since 1985. It is one of the reasons why an appraisal should be done, and there are numerous specialists that can help you assess the value of your collection. A professional appraiser should optimally view your works of art on location, as it is not recommended that an assessment of worth be done from photographs only. The appraised value will be subject to the current market interest for the object, as well as its authenticity, age, condition and rarity. Some variances in the estimate is not unusual, given that an appraisal is based on an expert’s opinion at a given date. The other key reasons you might like to have your artwork appraised is for insurance purposes, or if you wanted to sell, share or donate your collection to family members or charitable organizations. An appraisal will also help in the settlement of an insurance claim should your item be lost, stolen or damaged. It is recommended that updated appraisals be done every three to five years in order to ensure there is adequate coverage.

Take inventory

It is much more efficient to have your various works of art and collectibles appraised if you have a report of your inventory. This document will be very useful when working with the appraiser, as it usually includes a detailed description of each item that you possess including its unique characteristics. Dated photographs and invoices could also be included. This information would be extremely useful should you wish to share or sell your collection, and for insurance purposes should it ever become damaged or stolen. A copy of this inventory should be kept in a secure location away from your premises.

An ounce of prevention…

As time goes by and as your collection grows it is likely that it will appreciate in value. It is therefore increasingly important that proper security and care be taken to prevent damage. For example, keep in mind that a painting that is kept close to a window could be damaged by direct sunlight. Breakable pieces should be displayed in areas with less traffic or in cabinets. Having an alarm system for fire and theft may help protect your works of art and collectibles and there are dedicated security devices available for higher valued items. If moving your collectibles or works of art, make sure to have arranged for professionals to pack and unpack your items so that they will arrive at your destination intact. When storing them, ensure that the chosen location is heated, secure and is owned by a reputable firm with experience in dealing with valuable items.

Ensure you have insurance

So now you find out that Aunt Millie’s miniatures have a monster sized value! You need to consider insurance given that, notwithstanding your best efforts to protect them, they are still vulnerable to fire, smoke and water damage, theft, breakage or damage during transit. Ask your insurance broker if your residential insurance policy provides you with adequate coverage for your works of art or collectibles before a loss occurs. Your broker will help you choose an insurer that will offer comprehensive coverage that meets your needs. Opt for specific coverage that lists the agreed-upon value of each item, as this will be the undisputed amount you would receive in the event of a covered loss. It is possible that some items can be restored or repaired, so you should make sure that your policy reimburses you if this results in a loss of value to the items. Finally, ensure that your policy covers your possessions worldwide and while in transit, because it’s better to be safe than sorry.

    Your works of art and collectibles may be valuable, so make an inventory, get an appraisal and be protected. And although you may always cherish your child’s finger paintings more than anything else, protect your other artistic assets, so that your children may be able to benefit from their beauty one day as well.

Written by Bruce Ogilvy, President, Ogilvy Insurance Inc.

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