Art Basel, the international art fair with three shows staged annually in Basel, Miami Beach and Hong Kong. The shows offer parallel programming produced in collaboration with the host city’s local institutions. Art Basel provides a platform for galleries to show and sell their work to collectors, museum directors and curators. The 2015 show in Miami presented 267 leading international galleries from 32 countries. Over five days the show attracted 77,000 visitors including private collectors and directors, curators, trustees and patrons of nearly 200 museum and institution groups. The show hosted first-time collectors from Cambodia, Ethiopia, Nicaragua, Romania, Togo and Zimbabwe. That’s a lot of art moving around and collectors Art policies should cover Art, when purchased, on consignment and in transit, it’s about knowing your coverage situation before it’s too late.
The transportation of art is a tricky thing, and as fine art transportation insurance leaders we can tell you exactly what you require to know so that your insurance program will be effective and cover you properly. Insurance coverage during transportation, installation and exhibition of irreplaceable works of art, antiquities, and memorabilia isn’t optional and the best way to obtain the finest coverage is to visit artinsurancenow.com or call us at 800.921.1008 to speak with a knowledgeable fine art broker that can advocate for you in seeking the best possible insurance terms.
For many of us, amassing a robust collection of works by the artists we love is more a dream than a reality (though startups like Art Money are working to provide interest-free loans that should make buying art more manageable). But for emerging collectors and seasoned vets alike, the actual purchase of a piece is only the beginning of what it means to actually own art. Though not flashy, art insurance is a crucial part of collecting. It ensures that, should an artwork be damaged, it can be repaired or, in the case of a total loss, some kind of remuneration can be provided. So what do you need to know about art insurance? We sat down with Robert Pittinger, senior vice president and director of underwriting at AXA Art Americas Corporation, to get some helpful tips.
Know the Process
When a collector buys specialty art insurance, they’ll work directly with a broker who can assess the collection and determine what policy the collector might need. That broker, in turn, works directly with the insurance companies to find the right fit. A common misunderstanding of the process, Pittinger says, is that “collectors confuse the broker with the insurance company.” It’s helpful to know that “the role of the broker and the art insurer complement one another; however, the roles themselves vary and they are different. A specialized fine art broker is an advocate for the collector in seeking the best possible insurance terms for their clients.” As an insurer, AXA itself works with a select group of fine art brokers.
The first step toward getting insurance is—unsurprisingly—to determine what is going to be insured and for how much. To this end, documentation is key. “One of the biggest things is that the collector needs to have all the documentation for their collection before they go to the broker, because the broker has to have a very thorough understanding of the price of the collection,” Pittinger says. When approaching a broker, collectors should have a list of all the works, descriptions, invoices of sale prices, the purchase dates, and subsequent appraisal prices.“The collector’s management of their collection is critical, whether they have an online management system or a spreadsheet or they have manuals with all the documentation and their appraisals—that is a critical part of purchasing the insurance,” Pittinger says.
Assess Your Needs and Options
All this information is important to provide to the broker so they can determine what insurance is best for you. Though most collectors who need insurance already have it, some collectors think they’re covered by everyday, run-of-the-mill homeowners insurance. And they can be. But, as Pittinger notes, “A homeowner package policy generally is an add-on coverage. It doesn’t go into detail.” Homeowners insurance that covers art might have high deductibles, might not cover a collection across multiple houses, or might not cover the work during transit. That last one is a particularly sticky issue because “any time a collector moves their art, there is increased risk of damage,” Pittinger says. “That is the number one cause of loss for the insurance industry that specializes in art insurance.”
All this is why, for collections larger than just a few items, Pittinger recommends specialty art insurance. Even lower-priced works and emerging collections can receive insurance: For pieces priced as low as $2,500, AXA offers a 12-month policy of $75, with a minimum premium. Generally, however, it is hard to say exactly how much art insurance costs—it depends on too many factors. “Art insurance is very reasonably priced compared to other types of insurance,” Pittinger says. “The price range varies depending on the type of works, the size of the collection, security, where it is kept, if it is in a fine art storage warehouse or in their home or in a museum—all those factors go into pricing a fine art collection.”
Stay Up to Date and Be Careful
Broadly, in the event of damage, an insurance policy pays out in one of two ways: Either the policy will pay a set, agreed-upon amount determined by the insurer and the collector in advance, or the policy will pay out based on the work’s current market value. Pittinger says collectors opting for the predetermined payout structure may do so for a number of reasons, including peace of mind so that they “wouldn’t have to worry about substantiating the value of the works” in the case of damage. Agreed value can also move up and down over the life of a policy if the collector decides to get the work reassessed.
Current market value is exactly what it sounds like: The work is insured for its current value if that figure exceeds an agreed value. “But the important thing to remember is there would be a restriction—the company would by no means pay more than the total limit of the policy,” says Pittinger. In other words, if a collection is insured for $10 million total, and one work that has radically increased in value is damaged in excess of $10 million, the insurance would still not pay more than the total cap.
Be a Smart Buyer
One final note: Do your research. Make sure you get a full condition report prior to purchase. “It’s also critical that the collectors be careful with the provenance of the piece to make sure there’s not a gap in the ownership that could come back to haunt them later,” Pittinger says. If there is an issue and the work is seized for, say, having been looted by Nazis, insurance typically won’t cover that turn of events (there are, however, some specialty insurers that would protect against such loss with what is known as title insurance). So when it comes to art insurance, the old adage “buyer beware” certainly still applies.
For a quote apply here or call us at 800.921.1008
The Print, which was stolen while the museum was open to the public depicted Ali in a classic boxing pose painted in the brilliantly colored, expressionist style that LeRoy Neiman was known for. Brazen thieves ripped the print from the wall even with security cameras watching, It’s important to understand the value of art insurance and protect yourself by covering your valuable collection.
Although risk extends beyond theft (47 percent of art loss is attributed to damage during transit according to The New York Times) art trafficking is a very real thing and according to statistics ranks third behind drugs and arms.
In a case of theft, the loss is irreversible. Not only the artwork is irreplaceable itself but also even the reputation of the organization suffers from a mere fact that such situation has occurred. Without having a comprehensive fine art collectors insurance from a trustworthy art insurance broker, the masterpieces are subjected to risk.
Apply for coverage here or call me if you have any questions or to discuss your options.
William G. Fleischer CIC | Principal
T: 212 566-1881 ext.111
Not just David Bowie’s Estate sends work to the art auctions but individual collectors do also.
The most popular conversations I have are collectors looking to insure their work while in transit to an auction house like Christie’s, Sotheby’s, de Pury, and Phillips house.
Many times the auction house will either visit the collection or ask the collector to send the item to be auctioned directly to the house, either to be further evaluated or to be inserted into the auction rotation.
The preferred Collector’s insurance policy I like to sell, include and is not limited to coverage in transit and away from premises, in exhibitions and in storage and does not exclude auction houses.
The evaluation of the Art is based on two different models. Depending on the Art Insurance Company policy wording, One base is on the schedule amounts of the item on file (either with the Insurance company or the Collector) and the other is based on the current market value (onus of proof is on the collector).
In the case of David Bowie, Jim Hendrix or even Robin Williams, the auction house receives these items on consignment and will charge a hefty fee to insure them while on the premises. I advise my clients to not use auction house insurance because most of the policies I sell have coverage for unnamed locations or broad enough to cover the works given for sale on a stated amount.
One of the downfalls of using the insurance, the auction houses give you, is how their insurance establishes values of the art at claim time. Usually, it is not based on the artwork consignment agreement but on the lowest estimated value. The cost to you for using their insurance is usually much more expensive than what you are currently paying. The standard auction house’s most common policies have wording to the effect of;
“Property of others consigned to you for auction, at the lowest pre-sale estimate” and “Where no consignment receipt exists but the article appears on your records fully described, such property shall be valued at the lowest anticipated pre-sale estimate or the amount for which you are held legally liable, whichever is less”
This may be lower than your schedule or market value to entice attention for a bidding war.
When in doubt, call me to discuss your unique situation.
|William G. Fleischer CIC | Principal|
|T: 212 566-1881 ext.111|
Damage to Art happens more often than is reported. How can you make sure you are covered?
American Airlines, along with seven other art handling companies, is being sued for damage to a slash sculpture by Lucio Fontana. the damage work occurred while it was being shipped to the New York Armory Show. Lloyd’s of London was the insurer for the gallery, Marc Selwyn Fine Art.
Most art claims arise from transit damages, this is so important to make sure your current Art Insurance policy covers losses while your fine art, antiques, and collectibles are being shipped. Most policies do not restrict the mode of transportation be it Air, Train, Boat or Truck, but they do restrict using the United Postal Service’s regular mail.
The Swiss art trading company AGB Contemporary AG consigned Concetto Spaziale (1955-60) to Marc Selwyn with a sale price of €175,000 ($196,000), according to the ArtNews newspaper. When the work was actually damaged is difficult to figure out.
The Art was packed and stored by World Freight outside of Paris, then trucked to Charles de Gaulle airport for JFK via American Airlines flight to New York. One week later, the sculpture was transported to the Armory Show where it was uncreated and the damage discovered.
Now, this is where I find it interesting. Lloyd’s paid Marc Selwyn Fine Art $104,250 to cover the insurance money due. But the work was for sale for $196,000 why did Lloyds of London pay out less? My theory has a few variables.
The Art Dealer, Marc Selwyn Fine Art policy had a valuation clause of % of sale price or a % of consignment agreement minus a deductible. Sidebar comment: checks are made to the dealer, not the lender, which could be a problem if the dealer holds back or refuses to pay the lender, it is recommended you ask to be a loss payee on all valuable work given to dealers/galleries.
These 3 variables are important to ask if you are the collector trusting your art, to a dealer.
- What is your policy evaluation clause if the work is stolen or damaged? Typical dealer valuation is selling price minus 20% or 30%.
- What is the valuation based on Consignment? usually consigned amount plus 10%. But what if work was double consigned? most policies are silent on this and would have to be clarified by the company or the courts.
- What is the deductible on the policy, $1,000, $10,000, $100,000?
- Are there any restrictions on the method of travel? to countries?
- I highly recommend the lender to be named as a loss payee on the dealer policy, in the event anything should happen to the consigned work.
Each situation is different. Circumstances and risk tolerances evolving around the” business of Art” should be explored to help mitigate losses due to the unforeseen perils in the world we live in.
William Fleischer, CIC
800-921-1008 ext 111
Collecting Art is fun, but maintaining values fluctuate a lot on an insurance policy. All homeowners policies where fine art is a part of the policy are written on a scheduled basis.
To add these artworks to your schedule, the company requires a current bill of sale or a current appraisal. The value is locked based on the schedule, good if the value goes down, bad if the values goes up.
Here is an endorsement which I feel the collector should consider when they are insuring an art collection.
It’s the Current Market Value 150. With this endorsement, the company will pay the amount shown on the Schedule for which the item is insured. However, if the market value of the itemized article immediately before the loss or damage exceeds the amount of itemized coverage for that article, we will pay its “current market value” immediately before the loss or damage up to 150% of the amount of the itemized coverage for that article. Of course, if the item market value decrease you will get less.
For a quote on Fine Art, Collectibles and objects of value click here for the collectors application on my website.
Recently with all the Auction houses in full mode, I have been receiving many phone calls concerning artwork in transit.
The main movement of Art and Collectibles are going to the Auction houses. Most of the time, Individual’s would send the auction house information about the work, and if acceptable, the burden of insurance falls on the collector to get the work to the Auction house.
Most collectors who sell through auction houses, don’t think about coverage while it is at the Auction house. Many Auction houses charge very high rates for this coverage , which in many circumstances are included in my design of the policy.
Granted, you can buy a one-way art or collectibles transit policy that stops once the work is received, or you can think beyond and purchase a policy which at times include insurance coverage while shipping to Auction Houses, Galleries, Storage, and framers.
Complete my form for collectors, and let’s figure out an Art Insurance program which fits your style.
William G. Fleischer, CIC
Recently, while I was discussing art with an attorney, UCC filings came up. Usually, this is filed when you take out a business or personal loans and the lender to protect its collateral files the UCC with the state.
It’s an inexpensive file, which is used to notify the state you are a lender and have claim to the object corresponding to the UCC.
So I always tell everyone when you lend for sale your Art, to always have an expiration of consignment, in case the other party gets in financial difficulties the asset reverts to you at the end of the consignment date.
But now adding the UCC you attach yourself to the asset so any court can recognize you are in line to be paid if the art is sold.
An interesting layer of protection from an unstable partnership.