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What to ask Art Gallery/Dealer before consigning your Art

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.

  1. What is your policy evaluation clause if the work is stolen or damaged? Typical dealer valuation is selling price minus 20% or 30%.
  2. 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.
  3. What is the deductible on the policy, $1,000, $10,000, $100,000?
  4. Are there any restrictions on the method of travel? to countries?
  5. 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

www.ArtInsuranceNow.com

 

Employee damages Art, is it Covered?

In December 2015, a security guard damage, defacing and destroying paintings and sculptures of artwork, in the Wexner Center for the arts, Ohio State University, before killing himself. Does AXA Museum policy cover such losses? Yes.

The AXA Museum form does not exclude for damage by an employee or the public.

AXA Museum policy covers Art owned by the Museum, property on loan or offered for sale to the Museum. The coverage extends to frames, crates, cases and packing material.

The main focus will be the loss settlement. After, restorers and appraisers evaluate the work to determine the Current Market Value of any work determined:

 A Total Losses, the company we will pay “current market value” of the property at the time “loss” or damage occurs. The “loss” or damage shall be ascertained or estimated according to such current market.

For the Partial Losses, The company will pay the Museum an amount mutually agreed upon based on the following:

(a) The cost to repair the property to its value immediately before the “loss”; or
(b) The difference between the value of the property before and after the “loss”; or
(c) The cost to restore the property as nearly as possible to its condition immediately before the “loss”. If the restored value is less than the value immediately before the “loss”, we will pay the difference between the restored value and the value immediately before the “loss”.
Having the right policy in place with the right coverages helped Ohio State University with the money to rebuild and or restore their amazing collections.

Insurance is to indemnify and restore the Insured to the situation prior to a loss. Sadly, Art is one of those objects which are very difficult to return to its original grandeur.   Nothing last forever, but one would hope, through proper insuring a collection, it could be rebuilt with similar works or genres.

William G. Fleischer | Principal
T: 212 566-1881 ext.111
E: wfleischer@bfbond.com
W: ArtInsuranceNow.com
Art_Signature

 

 

 

AXA Art Insurance Company

 
Good News! After 29 years in the Insurance Business, I have partnered up with   AXA and Travelers Insurance Company. We can now negotiate favorable terms and conditions with very competitive pricing. I now have the facility to insure all types and size collections, Dealers, Museums and Non-profit galleries.
If you are involved in the art world, I can insure your exposures.

• Commercial Art • Art and Antique Dealers • Restore and Conservators • Museums • Private collectors • Large or Small inventories. • Domestic or International. • Art Fair transportation, while at fair,     shipped to collectors • Art loaned to Museums or non- profits, • Art being shipped or carried on board, • Coverage for special events, Parties,     Gala’s, Dinners. • Non-profit organizations and more

There are special policies so broad that besides the standard theft or breakage coverage’s it actually includes mold and devaluation of the art pieces due to a loss. The premiums begin around $2,500 for about $250,000 worth of protection.

Recent successes:  An Art dealer who brings works to various fairs and sells from her private gallery just purchased this policy

$300,000 premises limit $300,000 unnamed location $300,000 while in transit We set the unnamed location limit and transit limit as matching limits to avoid any gaps in coverage. Premium is $3100 with $1,000 deductible.

The Genuine Article“Total flexibility with market-leading security – the ultimate high-net-worth coverage for art and antique collectibles, buildings, and contents.”
Call me with your questions.

William G. Fleischer, CIC 212 566-1881 ext 111 wfleischer@bfbond.com

Dealer Insurance, Museum Insurance, Corporate/Private Fine Art, and Collectibles Insurance.

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Newly Designed Artist Insurance Policy Protecting your Art.

Our new Artist Insurance Policy is designed for the active Artist.  Your Art is covered while in the Studio, in Transit, while at Exhibitions and when in storage.  No more worrying about, Theft, Fire, Water Damage or Vandalism. These coverages and more are covered in our Artist Insurance Policies.

Worldwide coverage: Whether you show in Venice, Hong Kong, Paris or any of the Art Basel locations! Everywhere the USA has a trade agreement. Our policy will cover your Art in Transit, Storage and while at galleries and exhibitions.

Highlights of coverages:

  • Artwork in the studio, up to $300,000.
  • Art is covered While in Transit, At Exhibitions, In Storage and Worldwide.
  • A XIV Rated Insurance Company (by A.M. Best).
  • No Membership, No fees, No Maximum per item, and No Appraisals or Schedules.
  • Very low $1,000 deductible.
  • Best loss settlement valuation. Selling price less 30%. Includes Works in Progress.
  • Supplies, Canvas, Materials, Paints, Frames, Tools and Reference libraries are also Included.
  • Replacement Cost of Studio Tools and Equipment.

For more information or to discuss your particular situation contact me, William G. Fleischer CIC | Principal.  T: 212 566-1881 ext.111 or visit us at www.artinsurancenow.com to fill out a quick EZ application for a fast, free quote.

 

Chubb Definition of Loss of Market Value

The loss of market value is determined as follows:

if the amount of itemized coverage for the article is less than the market value immediately before the loss, we will apply the percentage change to the market value immediately before the loss.

If the amount of itemized coverage for the article is equal to or greater than the market value immediately before the loss, we will apply the percentage change to the amount of itemized coverage for that article.

“Percentage change” means the change in market value resulting from the covered loss, after restoration if any, expressed as a percentage.

Artinsurancenow.com

Response to Chubb white paper report

As a broker who sells Art insurance, www.artinsurancenow.com, Antiques and Collectible Insurance nationwide, I can attest to the increase in awareness of Values across collections.  May it be Fine Art, Photography, Antiques, Rare books, memorabilia, and all that we collect, is influenced by various media outlets.

 

There are many ways to position an Art Insurance Policy where it can keep your valuables, relatively current with the market price.
Appraisals cost money, there are endorsements which can be added to policies to increase the value by 150%. Just remember the company will not pay you more than the policy limits or class limits.

 

Each Carrier, AXA, Chubb, Travelers or Markel, have products which either complement your Homeowner’s policy or have a standalone Policy.
If you are interested in exploring the option you can call me:
William Fleischer, CIC
Bernard Fleischer & Sons, Inc.
29 Broadway
New York, NY 10006
212 566-1881 ext 111
www.Artinsurancenow.com

Is Art insured in the belly of a Plane

Yes, items can be checked into luggage and still be covered, but this is not the best way to ensure coverage under this policy because you will be violating the packing warranty. 

The packing warranty is broad enough that it allows the Insured to pack the items, but still must be packed “utilizing procedures and materials to protect the Covered Property.” 

What does this mean?  It means you can pack a wood carved 12” dish into your luggage, but you cannot insure a Tiffany lamp wrapped in a sweatshirt.

If the item is of art or cultural importance, the country of origin may seize the property.  This policy does not cover any Governmental Action.

Fill out a collectors application for a quote today.

 

Interesting Art related Articles links

Art Forgers Beware: DNA Could Thwart Fakes

http://www.nytimes.com/2015/10/13/arts/design/developing-dna-as-a-standard-for-authenticating-art.html?_r=0

Looming spectre of theft at art galleries

http://citizen.co.za/384098/looming-spectre-of-theft-at-art-galleries/

Here’s how much it costs to package, ship, and insure a multi-million dollar piece of art

http://www.businessinsider.com.au/5-things-to-do-before-you-buy-an-expensive-piece-of-art-2015-5

Provenance Premium

http://appraiserworkshops.blogspot.com/2015/04/porvenance-premium.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AppraiserWorkshops+%28Appraiser+Workshops%29

Creator or Buyer: Who Really Owns the Art

http://artlawjournal.com/visual-art-ownership/?utm_source=wysija&utm_medium=email&utm_campaign=April+20+2015

 The Smarter Way to Invest in Art

http://www.bloomberg.com/news/articles/2015-03-19/art-investing-smart-buys-are-overlooked-underappreciated-works

Writing off the Warhol Next Door (Art Collectors Gain Tax Benefits From Private Museums)

http://www.nytimes.com/2015/01/11/business/art-collectors-gain-tax-benefits-from-private-museums.html?emc=eta1

No Artist Resale Rights for US, for Now

http://news.artnet.com/market/no-artist-resale-rights-for-us-for-now-220318

All Together Now: Artists and Crowdsourcing

http://www.artnews.com/2014/09/02/artists-and-crowdsourcing/

Ian Berry: Teaching Students How To See

http://www.artnews.com/2014/01/20/ian-berry-teaches-students-how-to-see/

Sotheby’s and Jancou Battle in Appeals Court over Cady Noland Artwork

http://www.artinamericamagazine.com/news-features/news/sothebys-and-jancou-battle-in-appeals-court-over-cady-noland-artwork/

The Visual Artists Rights Act of 1990

http://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?article=1540&context=ggulrev&sei-redir=1&referer=http%3A%2F%2Fwww.bing.com%2Fsearch%3Fq%3DVisual%2BArtists%2BRights%2BAct%2Bof%2B1990%26form%3DIE11TR%26src%3DIE11TR%26pc%3DCMDTDFJS#search=%22Visual%20Artists%20Rights%20Act%201990%22

Consignment Options

I was chatting with a Art Dealer and we were reviewing A proposal for her business. As we went through the quote, she had a question regarding Consignments.
Interesting, as a dealer, the usually business model is to receive work on consignment, but what happens when you consign works to other dealers. How is the coverage applied.

So I pulled out policy forms and started to read through them. This is what I found under Valuation.

Property on consignment, at agreed consignment value plus 10%

So My question to the underwriters, is the valuation used for any consignment agreement whether if the deal is the consignee or the consignor.

In one underwriters opinion, he wrote to me this

Since this is a dealer form, the consignment refers to property on consignment to the Insured as the dealer.  This way the owner of the property is made whole, and the dealer gets 10% for administrative and marketing expenses they have incurred.”

but the underwriter failed to clarify works on consignment to other dealers.

 

Property sold but not delivered and/or while in transit to consignee’s or owner’s premises shall be valued at the selling price plus expenses, if any, which have accrued from the date of sale

So now my question is while in transit to consignee, if not sold, how is it valued, based on what i read, it would be selling price plus expense,. You would think the company would argue the dealer valuation of  cost plus 20% or 30%  or selling price less 20% or 30% depending what negotiated with the from Insurance company).

To further complicate the issue, another company responded a a simple way. A Consignment is a consignment no matter to the dealer or among dealers.

So in conclusion I must use that famous insurance answer to almost all questions of coverage; “maybe, depends”

This is why I love the Insurance business exploring the grey areas in policies.

Visit my main website page here

APPLICATIONS:

Art Dealers
Artist Transit/Exhibition/Studio Insurance New Program
Auctioneers
Conservators/Restorers
Corporate Collections
Personal Collections
Exhibitions
Museum Collections
Business Owners Liability

BERNARD FLEISCHER & SONS, INC.

29 Broadway, Suite 1511, New York, NY 10006-3201
(212) 566-1881 ext 111 or (800) 921-1008

 

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