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Uzone.id – There are various reasons for collecting works of art, ranging from being an appreciator to seeing works of art as a form of investment.
Whether your motivation is aesthetic or monetary, chances are your art collection holds significant value. To safeguard your prized possessions and ensure they’re adequately protected, it’s essential to have them properly insured for their full worth.
When do you need art insurance?
As an art collector, you may ask when is the right time to buy art insurance. Well, experts suggest that if your collection is growing and growing, now is the right time. Many insurance companies state that there are 3 general reasons why your collection needs to be insured.
- The location of a work of art is common knowledge: If the value of the work is high and people know where the work of art is located, the likelihood of theft will increase.
- Works of art are always in motion: If you frequently move art from one location to another, valuable works of art are the most vulnerable when moved. CEO Huntington Block stated in an interview with Insurance Magazine: “85% of our claims come from transit losses.” Art owners understand that lending their works to galleries, museums, and universities for display is one of the best ways to increase an artwork’s value, but art that is constantly in transit is vulnerable to damage, theft, and loss in transit.
- It is clear that works of art are subject to deterioration: it is quite normal that, with time, everything deteriorates including works of art. To have old works of art, the question of clear provenance is also relevant.
What does artwork insurance cover?
In its most basic sense, Art Insurance is indemnity against any misfortunes that can befall an artistic work. Art insurance shields your art from theft, fire, accident, and other mishaps
As a rule, art insurance will reimburse the client for lost or damaged items because of fire, theft, vandalism, or accidental damage. Most of the policies will also provide you with a reimbursement for loss of income if your collection is damaged or lost such that it can no longer be used to generate income, for instance through rentals or exhibitions.
Some policies also provide for cases of forgery which is a situation whereby a person will make a fake artwork and attempt to sell the same as an original artwork. Forgery insurance can be especially important for high-value works of art that pose a risk of counterfeiting.
It’s important to remember that most art insurance policies will not cover damage that occurs gradually over time, such as water damage or fading from sun exposure.
If you are unsure whether your policy covers a particular type of damage, be sure to contact your insurance agent and ask.
Types of art insurance
Art insurance has two main classifications: private and institutional. Private and institutional art insurance policies can be modified to suit the unique needs of the art collector or institution. When insuring works of art, it is important to look at the scope of coverage, what is excluded as well as the deductible.
Private art insurance is intended for an individual art collector and his collection, including paintings, sculptures, antiques, jewels and watches, and other art objects that the family or an estate owns.
Private art insurance
Private art insurance is that which is obtained by private art collectors for their pieces. Provides insurance for the art that is in private collections by individuals, families, estates, and other owned artworks which may include paintings, sculptures, antiques, jewelry, watches as well as other collectibles. Private fine art insurance also may include works of art, located in other places, such as borrowed for exhibitions and stored in other locations.
The so-called ‘homeowners policies offer a certain measure of protection for personal items, which includes works of art but the art collection coverages are often severely restricted, very much like being pegged at 50% to 70% of the building structure’s value.
Probably it will not be enough for a high-value collection and in such cases other parameters are taken into consideration. Many homeowner’s policies include special provisions for fine art, antiques, and similar objects; the maximum limit for such items usually does not exceed 10 percent of the total amount insured in the house.
Of course, some of the stupidities include the homeowner’s policies that refuse to cover artwork or damages by natural disasters like earthquakes and floods.
Institutional arts insurance
Arts insurance relates to insurance products designed for museums, galleries, auction houses, and other related arts establishments.
It gives coverage to those collections that are in the custody of a certain institution or are part of the property of an art collector who has conferred on the institution the responsibility of preserving the artworks.
Institutional art insurance can cover many risks, such as theft, damage, and loss. It may also cover damage caused during exhibition, loan, or transit.
In addition to current security measures and the value of the collection, many other considerations impact the cost of institutional art insurance. This includes the history of previous claims, the reputation of the institution, and the types of art covered.
Art insurance costs
Most insurance brokers will offer a Title Insurance policy that usually covers between 1% and 7% of the total value of the artwork.
This percentage is justified because the provenance of the artwork, especially with older works of art, may be difficult to trace back to a time when the work may have been in the artist’s studio. If there are no solid transaction records available for the item, you will likely pay more for Title Insurance because it is considered a higher risk.
It is that it becomes a bit challenging to arrive at the total cost of fine art insurance because the insurers will be taking into consideration several things. Some things that may affect the cost of your art insurance premium include: Some things that may affect the cost of your art insurance premium include:
- Evaluation of the type of art you intend to insure
- At what frequency are you able to move or lend the artwork
- The place where your art is situated
- But how is your artwork preserved?
- Your home security system
- State of the artwork at the present moment
- If the artwork has not been damaged beyond repair how much will a replacement or even a partial restoration set you back
- The art world on the whole advises you to budget on average between one and two percent of the value of your art per year.
