Collecting fine art can be a life-long pursuit of happiness. Owning rare and unique items comes with its own risks, however, as a standard household policy usually does not cover these prized possessions. We caught up with Suzi Rackley of Aston Lark to discuss fine art insurance and how to navigate the market.
Arts & Collections: Why do I need art insurance?
Suzi Rackley: Art is often a prized possession or carries great sentimental value, most household insurance policies do not provide sufficient insurance cover for art, often restricting the overall settlement with low limits per item, so it is vital to insure correctly. Proper art insurance—either standalone or as part of a specialist High Value Home policy—will provide cover for a settlement figure that you agree with the insurer upfront, usually based on a recent valuation. Some policies will uplift this settlement figure by up to 150 percent if the valuation is within three years old. A good policy will also pay for the depreciation in value after an item is damaged and provide support in helping you find a restorer. Art insurance will cover your collection anywhere in the world and whilst in transit, storage or with your restorer.
A&C: What is the first step in insuring my art collection?
SR: Find a good broker who has experience insuring art and talk to them about your collection and what is important to you. They will give you advice on what type of cover you need and the best insurer to be with.
A&C: What are the different elements and documents I need to insure my art collection?
SR: A valuation that has been carried out by a qualified valuer, preferably one who is registered with a professional body such as the Society of Fine Art Auctioneers and Valuers (SOFAA). If it is a recent purchase it is important to have the receipt or invoice coupled with information on the provenance of the item. These documents provide us with a detailed description, size and the current replacement value which means we can arrange the right level of insurance cover with insurers. It is also very helpful to provide photographs, both of the front, back and frame.
A&C: What are art appraisals and how often should they be scheduled?
SR: Art appraisals or valuations are vital to ensure that your collection is insured properly. A valuation should be carried out in person by a qualified professional, preferably someone who has experience and an interest in your style of collection. If your collection is contemporary it would be ill-advised to use someone who specialises in Old Masters. Most large valuation houses offer a rounded-out service, but if you have a particular taste it is worth doing your homework before choosing your valuer. Generally, a valuer will visit you to view your art collection first-hand. They will ask you questions about when, where and who you purchase your art from and may ask to see copies of receipts, previous valuations and any information you hold on the provenance of an item. All of this helps the valuer build a picture of the history of your collection. They will also take photographs and note the size and description of each item, including the frame. After the valuer has carried out extensive research you should be presented with a catalogue of your collection, with pictures and suggested replacement values. It is important to be clear to your valuer that you are asking for a valuation for insurance purposes as this can differ from probate purposes. Depending on your collection, generally you should have a valuation updated every three to five years.
A&C: What are the most common claims?
SR: Water damage. Generally, if there is a leak in a property this results in water running down the internal walls damaging artwork along the way. We strongly recommend that you do not keep significant pieces of artwork on walls located under bathrooms; also avoid hanging art above fireplaces or in direct sunlight.
A&C: What are the main risks of not having appropriate insurance for my art collection?
SR: The main risk is being disappointed that the amount you receive following a loss does not cover the costs to repair or replace your collection, or that you are left with a repaired item that has depreciated in value, with no compensation.
A&C: What is the best piece of advice you can give to someone looking to insure their art collection?
SR: Never get complacent, it is really important to update your valuations every three to five years. All policies have limits on the amount you can claim per item unless you have specified it and agreed the value with the insurer upfront.
A&C: How expensive is art insurance and what types of insurance can art collectors choose from?
SR: The rate used by insurers to calculate the premium is one of the lowest—much lower than general contents, silver or jewellery. A good insurer will also allow discounts based on your security and fire protection. You can also opt for a higher policy excess (the first amount you pay in any claim) in return for a discount.
A&C: What sort of art insurance would an artist or gallery need—as opposed to a collector?
SR: An artist would need to consider cover for his studio building, contents and materials. Liability to the public if he has visitors or exhibits. It is also important to insure the finished artwork on the correct basis, which should be the cost of the materials plus labour and any potential loss of profit. A gallery would certainly need to have adequate cover for liability to the public and also their employees and—in addition to this—sufficient cover for the artwork in their care.
A&C: What are the most important questions to ask about art insurance before committing to a policy?
SR: Understanding what the basis of cover is, for example agreed value. What is the maximum amount per item I can claim for unspecified items and how would a claim be settled? Does the policy provide cover for depreciation, will my art be covered whilst in transit? What experience does my broker have and are the insurer’s specialists in art?
A&C: How do I know if my art is worth insuring?
SR: All art is worth insuring, anyone with a collection with a total value in excess of £10,000 should not rely on a standard household policy.
Aston Lark can insure your private art and antique collections, as well as high value homes, classic and sports cars and jewellery. For more information please call 020 3846 5266 or visit: https://www.astonlark.com/personal/high-value-home-insurance
This feature first appeared in Arts & Collections Volume 3, 2018. Click here to view the digital version of the magazine.
See also: Faking Point
Art in Our Communities: An Interview with Bank of America