A well known art collector named Richard L. Weisman has been making the news recently. After claiming that 11 Andy Warhol paintings had been stolen from his L.A. home he waived the $35 million insurance policy that he owns on the works, stating that he does not wish to undergo the ensuing investigation that the insurance company would undertake. Makes one wonder what he's hiding....
In light of these recent events I thought that I would write about art insurance - who gets it, what it is and how it works.
Compared to other types of insurance the art insurance market is rather small - but even in this economy it is steadily growing. Art collectors are becoming a bigger margin of society as a larger number of the upper class and upper middle class are investing in art. They are realizing that it is not just museums and galleries that need to insure their art, but the private collector as well.
Many times, people who own art either leave it uninsured or protect it under their property and casualty insurance. However, values of artworks are rising steadily and triggering the need for specialized insurance protection. For some, homeowners or renters insurance should be adequate(especially with a smaller collection), however, even then a specialty insurer offers undeniable advantages such as no deductibles, coverage of recent purchases and fewer exclusions.
Again, most cover their artworks through their homeowners insurance company and look towards specialty insurers when they are not satisfied(usually those with more expansive and valuable collections).
It all begins with getting your collection appraised. This will determine your claim payments and is an important factor in your premium. It is important for owners to have collections appraised every 3 to 5 years, as market prices will change.(Weisman's paintings are certainly worth more now than when he commissioned Andy Warhol in 1970). This way they are covered for appreciation. It also works in cases of depreciation so the owner is not paying for unneeded coverage.
Obviously premiums will differ depending on the company and the individual collections, but there are certain common factors that can influence pricing and discounts. Some involve common sense such as keeping your pieces safe, well framed and hung and away from windows and fireplaces. Some companies will even offer discounts for burglar and fire alarms. Other ways to ensure lower premiums are well balanced collections (meaning one piece should not be more than 30% of the total collection) and again, having your works appraised regularly. A big factor in pricing will also be location. If you are a resident of Florida, California or New York you may have increased premiums. This is because of hurricanes, earthquakes, and in New York - the sheer number of collectors in certain neighborhoods.
For those who have read about the Weisman case and wondered about art insurance - I hope this article clears up some general questions you may have had.
