Art, it is often said, is in the eye of the beholder. But without proper insurance coverage, art that is lost, stolen or damaged can be out of sight completely.
Homeowners or renters purchasing a piece of valuable art should call their insurance agent, broker or company representative as soon as possible. It’s important to find out if the artwork can be covered under the standard homeowner or renter policy or if additional coverage is needed.
Like jewelry and other expensive items, there are dollar limits on insurance coverage for art in standard homeowner and renter insurance policies. In many cases, additional coverage provided by a fine art floater may be needed.
Floaters generally provide broader coverage, including coverage for items that are taken home on a temporary basis but not yet purchased—for example to make sure you like how a piece of art displays in your home. Floaters also do not usually have deductibles.
Homeowners or renters with a collection of fine art may want to consult with an insurer who specializes in high-net-worth individuals and/or an insurer with an expertise in art. These insurers will generally provide risk managers to their policyholders, to advise on how to best protect the art so that it retains its value.
Risk managers can also provide art collectors important information on how to safeguard artwork from theft, damage from water, smoke and fire, changes in atmospheric conditions, as well as how to properly pack art if it is lent to a museum.
Those who have collected art over time should have the artwork regularly appraised to substantiate its financial value.
Cost of coverage will vary depending on the type of art, where it will be displayed or stored, whether it will be lent out and its geographic location. Premiums may be more costly in high-risk locations, especially those exposed to natural disasters such as wildfires, hurricanes and floods.
As with all expensive purchases, it is important to keep records and add the art piece or collection to a home inventory. A copy of the bill of sale, appraisal, provenance (history of past ownership) and photographs are all useful records and should be included in the inventory. To make this process easier, free home inventory software is available at www.iinc.org
.ADDITIONAL RESOURCESWorld Wealth Report 2011