You know how fragile art can be, so make sure you’re properly covered for the extent of your art investment. Potential coverage for fine art differs widely based on the customer. Make sure you’re covered for all foreseeable disasters so your collection of masterpieces doesn’t slip between your fingers.
Paint thieves out of the picture
Some museums and private collectors occasionally forego policies that include theft insurance, citing their items as priceless and irreplaceable. The Isabella Stewart Gardner Museum, however, famously learned the hard way that theft insurance includes benefits other than replacement when it was robbed in March 1990.
Two thieves stole a Vermeer, three Rembrandts, a Manet, and a Degas, causing losses of more than $500 million for the museum. The museum didn’t have theft insurance, so it wasn’t immediately able to offer a large reward for the stolen art. More than 23 years later, the FBI finally is making strides to recover the stolen pieces. Had the museum more fully insured its pieces, the story might have been different.
Some insurance providers specialize in fine art and collectibles. Here are some examples of the kinds of clients specialized insurers cover: museums, cultural institutions, exhibitions, universities and colleges, commercial galleries, private dealers, personal and corporate collections, artists, conservators, framers, auction houses, and art consultants. Like you, these companies understand fine art’s fragility and value, and they have an interest in protecting it in the best way possible.
If you are a private collector, there are two main ways you can protect your art. Regardless of which you choose, you should have your collection regularly appraised so that you will be able to substantiate its value in the event of a covered disaster. Options for coverage are:
Scheduling an endorsement: Home insurance policies typically have strict limits on coverage for high-value items such as jewelry and fine art. Scheduling an endorsement is an effective way to increase the limit under your existing home insurance policy. If price is a factor, this is usually the more economical choice. Another advantage is that you’ll continue to work with your existing carrier.
A personal articles floater: If you have an extensive fine art collection, you may want to opt for a separate policy from a company that specializes in fine art or other collectibles. This policy typically comes without a deductible, covers the highest-value collections, and will value the art differently. After a covered event, the carrier will provide the full collectible value of the piece versus its actual cash value. This policy also typically covers items in transit, items stored away from home, and newly acquired items for up to 90 days.
Another plus: These carriers also typically employ art experts to help you best protect your collection from theft and damage from water, smoke, fire, and atmospheric conditions.
Museums, cultural institutions, and universities
If you are the curator or director of a cultural institution, you might want to consider even more specialized coverage options such as mysterious disappearance coverage and loss inventory coverage.
In 1975, the National Endowment for the Arts created an indemnity program to help minimize the cost of insuring U.S. artwork during international exhibitions. This program is an agreement between nonprofit, tax-exempt organizations and governmental units. The U.S. government can provide up to $750 million in coverage for a single collection. Even if your museum or cultural institution qualifies for government indemnity, you may want to purchase an additional policy from an art insurance provider to help you lower deductible costs and extend coverage.
If you own or run a commercial art gallery, you also may want to consider a business policy. This business policy typically includes coverage for commercial liability, business contents, and workers compensation.
Even if you can’t replace priceless art, you can return and restore it. Don’t let your masterpieces slip through your fingertips. Make sure they’re protected with the right kind of insurance. Don’t gamble with your art insurance. This is one instance in which it is very important to color inside the lines.
This article was contributed by Katherine Wood, contributor to the HomeInsurance.com Blog. The HomeInsurance.com blog serves as a resource center for insurance consumers and homebuyers across the country.
This posting is for informational purposes only. Fox Rothschild LLP is not endorsing HomeInsurance.com.