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To Insure or Not to Insure? That is the Question!

April 30, 2020


People often wonder if they should insure their art.  I, for one, believe it is a good idea (and I have no financial connections to an insurance company or agent).  As some of you know, many of the works we acquire come directly from the owners, and most of the time, we discover that they are not insured. The most common reason for this is that in many instances, people have inherited works of art, and just do not know their value. It is only when they decide to sell that they learn the ‘old’ painting their grandmother left them is worth a considerable sum of money. So, if you own artwork, you should insure them — accidents can happen (I will give you a good example later).

When it comes to insurance, there are a few things to keep in mind.

First – Unless the works of art were recently purchased and you have the bill of sale, you will need documentation reflecting the work’s value. This can be in the form of an appraisal, a letter, or an updated bill of sale from the gallery you purchased it showing the ‘current retail replacement value.’

Second – If you need an appraisal, please be sure to have it done by an expert in the field – not just a general appraiser. If you are insuring a 19th-century European painting, do not have the appraisal done by someone who specializes in Contemporary art. You need to make sure that the appraiser has in-depth knowledge of the artist and their work, to assure that they will arrive at a correct valuation.

Third – Keep an eye on the market and update your values when needed – usually every 3 – 5 years. While prices, in many parts of the ‘art market,’ move in a steady progression, there are times when the price for a particular artist’s work will make a big jump. When you see this happen, make sure you adjust your insurance values.

Fourth – The easiest way to insure your works is to schedule them on your Homeowner’s Policy – most higher-end policies will have this feature. Scheduling them allows you to list each work individually and attach a specific value. For those of you with collections of significant value, you may want to consider a Personal Articles Floater, a stand-alone policy for art, books, furniture, etc. Call your insurance company or broker and find out which is right for you.

Fifth – Many of you are now thinking that art insurance is going to be very costly, but that is not necessarily the case (I did contact our broker – Ellen Ross of A.J. Gallagher – to confirm my numbers). The cost to insure works of art on your Homeowner’s Policy is between $0.07 – $0.15 per $100 of value — the exact amount will take into account the size and value of the collection, location, building’s structure (wood, steel, brick, etc.), security, etc. So, if we use the high end of that range (15 cents), a collection valued at $1,000,000 would cost approximately $1,500 per year to insure — not too bad.  As a comparison, the cost to insure jewelry on a Homeowner’s Policy is $0.85 – $2.25 per $100 of value … so using the upper end, $1,000,000 of jewelry will cost about $22,500 to insure.  Do note that these numbers are for personal policies; commercial policies will be more expensive.

Sixth – Make sure your broker stays on top of the market. There are times when the rates to insure works of art drop, and you want to take advantage of this when it happens.

Seventh – Understand the type of insurance you are purchasing and know its limitations. Are your works covered regardless of what happens to them?  Are they covered while in transit? At outside locations? Etc.

Over the years, we have seen many works of art that sustained damage due to accidents – broken steam pipes (causing large areas of the paint to come loose from the canvas); ladders that put holes in a painting, and works that have fallen off walls. While most damages can be repaired, if the works are properly insured, not only will your insurance company take care of the restoration cost, but in certain instances, they will pay you for any loss in value. Here is a case in point (a story I have used before):

Many years ago, a couple from the Midwest acquired a group of paintings from us – Ridgway Knight, Dupre, etc.  A short while later, they invited me to their home, and I helped rearrange some of them.  We placed one of the more important pieces in the bedroom, and I used two 50 lb. picture hooks.  The couple then went on a trip to Europe, and a few days into their vacation I received a phone call from the wife informing me that one of the paintings had fallen off the wall.  I was shocked and asked which one?  The answer, the one we hung in the bedroom.  I ask how that could be since we used two 50 lb. hooks on a painting that did not even weigh 25 lbs.?  She then informed me that before leaving, they arranged to have the bedroom painted, and her husband moved the painting to another location in the house (he actually hung it on an old 10 lb. picture hook). Well, as you might surmise, the hook could not support the weight, and the painting fell off the wall, first hitting the narrow table below and then falling forward, pushing a bell jar (which housed an antique microscope) off the tabletop.  Now visualize this, the painting falls straight down, begins to fall forward, pushing the glass jar and microscope onto the floor.  Since the table was narrow, the painting did not stay on top, but flipped over and landed face-up on the floor, hitting the microscope.  I then questioned her about the board we put on the back of the painting. Sadly, after taking the painting off the wall, her husband did not understand why it was there, so he removed it.

I asked if the housekeeper could take some photos and mail them to me (this was before the internet, so I received a few Polaroids – still have them).  The damage was substantial, measuring more than 70 inches. While devastated by the incident, the owners had properly insured their collection. In the end, after a lot of back and forth with the carrier, the work was restored, and the insurance company agreed that its value had been severely diminished; they offered the collectors two options. The first was to take a total loss on the painting, collect the insured amount, and surrender the work to the insurance company. The second was to take a partial loss and keep the work … since this was one of their favorite paintings, they opted for the second choice and accepted a ‘slightly’ lower amount.  They still own the painting.

One final thought … whatever you decide to do, it is advisable to have good quality photos of your valuable possessions and complete descriptions stored in a safe place (preferably away from home). Should there ever be an accident or theft, these photos will be of great value to you, the insurance company, and numerous law enforcement agencies.