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Art Insurance Demystified

By Edited Sep 27, 2016 0 0

In light of the recent Richard L. Weisman controversy I thought that I would write an article on the topic of art insurance. For those unaware of the story, the Los Angeles businessman and art collector claimed that 11 Andy Warhol silk-screen paintings had been stolen from his home. It was a curious case as there were no signs of a break in and the paintings were the only things stolen from the home, although there were many other valuable works of art. To make matters even more puzzling, Mr. Weisman waived the insurance policy that he owned which would have reimbursed him $25 million for the paintings. He claims that he did not want insurance investigators searching through his private papers as part of the investigation. Its a puzzling case - in this materialistic world one must only believe his motive for refusing the $25 million is to hide something nocuously self-incriminating.

So for us non-Weismans who would never turn down $25 million, who are curious about art insurance, who gets it, how it works - I thought this article might be helpful.

Most people who own art don't insure it outside of their property and casualty insurance. However, there are those who own art, and those who collect art, and the demographic of those who collect is expanding as more in the upper class and middle upper class see art as an investment. Along with that investment comes the need for protection and security. While many are happy with their coverage under their homeowners policy, others(usually with more expansive, more valuable collections) find that they are limiting and seek out specialty insurers. Why? Because specialty insurers offer undeniable benefits such as no deductibles, coverage of recent purchases and fewer exclusions(exclusions with a specialty insurer will typically only consist of war, nuclear disaster, wear and tear and possibly vermin.)

Who are specialty insurers? Some companies deal solely with art and collectibles, such as the very popular AXA. Others tend to be high net worth insurers who also specialize in art such as Pure(www.purehnw.com/products/jewelry_art) and Chubb(www.chubb.com).

How does the whole process work? The collection is appraised, and this will set the value of the work. However, artworks need to be appraised frequently, every 3 to 5 years at least in order to stay abreast of the market value.(Weismans paintings are certainly worth more now than when he commissioned them in 1970). These values are what will determine payout for a claim, and also a big factor in the premium. Obviously individual companies will differ but there are some common threads as far as discounts and pricing fluctuation. Residents of Florida, California and New York will most likely pay more. Florida and California because of hurricanes and earthquakes, and New York because of the sheer concentration of collectors in certain areas. Having a recently appraised collection(within two years as opposed to 3) and a well balanced collection can trigger discounts. Common sense will also lower the premium. This included keeping your artworks away from windows, fireplaces and making sure they are securely placed/hung using the proper tools. Some companies even offer discounts for home alarm systems.

So if you've happened to read the articles about Mr. Weisman in the news(maybe it's only news in NY where I live - seeing as it's the art capital of the world) and wondered how this whole business worked, I hope this article has helped to clear up some questions.



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