Insure your art collection

Few people would buy a house without insuring it and you can’t even legally drive your car without coverage, yet it’s common to see valuable art collections left financially unprotected.

Big mistake, experts say, especially given that those paintings and sculptures you have on display might be worth even more than your other valuables combined.

Dorit Straus, an art and insurance advisor based in New York, says art owners are often unaware of the value of their collections. “I think if today many collectors did discuss their collections with an appraiser, they would realize their art assets exceed their other types of assets,” Straus says.

While people often think theft is the biggest risk to their art, Straus says the major causes of loss tend to be more mundane things like fire, water damage and bumps and bruises from being handled.

Make a Luxury List

The key to knowing when and how to insure your art is to make a list of your items, find an independent insurance broker and start with an appraisal. A skilled appraiser will not only confirm the value of any art you may have but also help you prioritize what needs coverage first; your framed Picasso sketch might be far smaller in stature than the two-metre tall cast-iron sculpture in your foyer, but its value – and chance of being damaged – might be much bigger.

And, says Straus, if you have region-specific art, make sure to get it appraised by experts who specialize in that region.

Types of Luxury Policies

If you have art of significant value, a homeowner’s policy is not the appropriate place to cover it because home insurance tends to have limits on high-value items, so you’re unlikely to receive even close to the value of your artwork in the event of a loss.

Katja Zigerlig, vice-president, fine art & wine insurance, private client group at AIG says home policies typically only cover contents up to 50%-70% of the home’s value and are intended for basics. She suggests separate fine art insurance and for that you’ll have to pick a scheduled or blanket policy.

A scheduled policy consists of the combined value of every item covered, all of which need to be documented. This policy is ideal for collections with high value items, and you can tweak your coverage accordingly.

With a blanket policy, you pick how much coverage you want and then claim items as they get damaged or lost with no itemizing needed. But the onus is on you to prove you had the item in the condition you are claiming, and most blanket policies have limits on the maximum value per item you can claim, usually $20,000. Blanket policies are best for collections that include lots of items with modest value, such as vintage movie posters valued $300-to-$800 each.

The bottom line is this: If you have art that is worth serious money, do the extra work upfront and go with a scheduled list because it will mean easier payouts, better coverage and less stress.

Be vigilant and get regular re-appraisals on your collection every two to five years because if the value has gone up, your existing coverage likely won’t be enough.

Also, some insurers offer a “newly-acquired” clause, which will instantly transfer coverage to any new piece of art you buy for 30-to-90 days until you can have it officially added to your policy. These clauses typically cover up to a percentage value of your entire policy.

Most importantly, remember you get what you pay for. A cheaper policy might not be worth it if your provider skimps on payouts or challenges you on claims.

“You want a good company that is fair and equitable and provides good service, even if that costs a little more,” Straus says.