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.
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