Tag Archives: Art Insurance

Avoiding Online Art Fraud

The following are excerpts from our Principal William G. Fleischer’s Q&A interview with renowned online art site, Artsy.

Artsy features the world’s leading galleries, museum collections, foundations, artist estates, art fairs, and benefit auctions, all in one place.  William represents leading art insurers like: AXA, Travelers, Chubb, XL-Catlin, ARIS, Philadelphia, Tokyo Marine, Markel, Hartford, and Berkeley, just to name a few. He has been honored by Insurance Business Magazine as a top Fine-Art Insurance broker. 

1. How do you assess who is at fault in the case of online fraud?

It’s always the seller, and what does that mean? It means it could be an auction house, gallery, dealer, artist, or collector. It only takes one to commit fraud and fool the rest.

Anyone selling art or buying art has the exposure of fraud. Both parties must do their due diligence, such as verifying provenance, artist catalog raisonné, and authenticity certifications. If the art has an appraisal, then verify that it is not photoshop or touched up. To make sure one does all they can to confirm the authenticity, these are some resources: contacting the appraiser, establishing the comparisons, and researching the appraiser to avoid possibly buying or selling a fake.    

Some art dealers try to do a soft touch by requiring sellers/consignees to sign documents regarding titles, conditions, and appraisals to endorse that they are true. The more you inform yourself, the better; you can never do too much research or ask too many questions.  

When it comes to fraudulent art coverage, not all art policies cover fraudulent artwork; it is considered contraband, and selling contraband is illegal. If the work is scheduled for your collector’s policy and is found to be fake, there is no misrepresentation coverage. If you have a blanket policy, you will be paid for the fake market value. So buying and selling fake art is legal as long as you disclose it as a replica.

2. How have your policies adapted to cybersecurity breaches in the art market?

The traditional Art insurance policy has not adopted to cyber exposures. The insurance industry developed a special Cyber Liability Policy focusing on cyber-crime exposure. This policy pertains to identity theft, ransomware (when someone locks you out from your data, emails, network, etc.) extortion, stealing secrets passwords, defacing websites, and virus attacks. 

3. How recent is this sector in the field of insurance?

Cyber is about ten years old. With the proliferation of online business, there has been a growth of hackers, viruses, and extortionists. The increase has risen so significantly that our government has created requirements for firms to follow to protect consumers.

As for online fraud, it has been around since the time you could upload pictures to the web, and Adobe Photoshop was developed. This has caused many issues from wiring, bounced checks, and even sending empty boxes to purchasers.

4. How long has ArtInsuranceNow.com been involved in this aspect of insuring artworks? 

We have been insuring online art dealers for the past seven years. It has grown into a vertical marketplace. Everyone is selling online, including artists, collectors, auction houses, galleries, dealers, and even art stores.

Each has its own unique exposures to fraud. Keep in mind that not all policies are the same. Be sure to check if your policy addresses your requirements like online transit coverage, method of valuation at time of loss calculations, or covering your art inventory on and off the premises.

5. Do you see a greater need for this kind of protection in the industry?

For Cyber, yes. New York State has joined other states imposing a cyber law called “Stop Hacks and Improve Electronic Data Security.” (Shield) https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/new-york-shield-act.aspx this requirement enforces that all employers to have a plan preventing breaches to their computers, networks, and associated vendors accounts.

This is a forever ending battle between hackers and online transactions. As for the actual exchange of art, there have been talks of blockchains, but it’s too young of a concept and still unproven to be used as a standard in today’s art transactions. 

6. Can you provide some examples of cybersecurity cases you’ve had to handle? 

I have not handled any cyber claims directly, but I am aware of a few: 

A hacker was able to enter the data of a large firm. They then posted the information on a social media website for everyone to read. The leaked information included: what they purchased, addresses, the items they sent, family members, affairs, second homes, and other nonpublic notes in a client file.

This was a clear breach of confidential information. Although it was not their fault, the firm was sued because a spouse learned of an affair and asked for a divorce. Another lawsuit was served because a private loan against the art was shared, which tainted their reputation. All in all, this breach caused multiple cases.

Another case brought to my attention was a prominent online dealer who was hacked by ransomware (explained above). It was very costly to pay. They locked him and his staff out of their management system, websites, all email accounts, and their access to vendors.

The business was frozen until the ransom was paid. The dealer did have the option to rebuild his systems from scratch, but it would be time-consuming, and with these delicate matters, time is of the essence.

The last I will share case occurred with a museum. A director was out of town on business, a hacker got into her email and sent a request to wire money to the controller to purchase art work. Just like that, the transfer was done, and the Museum lost $30,000.

7. What should collectors keep an eye out for regarding insurance when collecting online?

For fraud, they should keep an eye out for: the reputation of seller and buyer, the person or company who does the appraisals, condition reports, how the art is packed, whether the items are on the government forbidden list (like ivory), and complaints. 

When it comes to cybersecurity, confirm: if there is a security in place, preventing attacks.If the second or third party provides software against breaches to their system, if there are approved certificates on their website, and have a separate bank wire account for just purchases.

Be sure to have firewalls on your computer, verify before opening embedded links by looking at the URL where it is coming from? Install anti-virus software and keep it up to date. Before clicking any link, go with your gut. When in doubt, don’t click.

We work with “A” rated Insurance Companies to ensure art collectors, galleries, museums, dealers, artists, and auctioneers that their works are properly taken care of. Get your free quote below.

The Importance of Art Transit & Insurance

Art collectors, museums, galleries, artists, dealers, and auctioneers have one interest in common – The love, and preservation of art. The latter is what proper art insurance is for. A knowledgeable broker will know how to meet your requirements and make sure that your valuable possessions are insured against unforeseen damage and loss.

Risk management in the world of art

Knowing the perils of owning art and how damage can be prevented is crucial for risk management in the art world. In other words, you will not know how to protect your valuable art if you are unaware of the risks. That’s why ArtInsuranceNow.com is here to help clients choose the right type of insurance tailored to their situation. 

Why should an artist or collector have to be familiar with insurance terminology in order to choose proper coverage, when they have a team that is at their service who will recommend coverage based upon their unique situation? There is another necessary step to set up a solid risk management framework, and that is hiring experienced art movers to transport your art. According to top art insurance carriers, most accidents involving art occur during transport making up to 60% of insurance claims. For mitigation of this risk, you will require qualified art movers to handle conveyance.

Do you know the true value of your art collection?

Even though you know the sentimental value of your art piece or collection, you will probably not be able to determine its market value until you get it properly appraised. Don’t have an appraisal? we can still write a policy but at the time of loss, you must prove the value. ArtInsuranceNow.com can present accurate coverage that is suited to you. This provides cost-effective, comprehensive protection. It is essential to have a policy that covers damage and loss on or off-premises, during transport, in storage, and while the art is being exhibited or auctioned.

Accidents Happen

The true importance of having proper art insurance can be seen when an unfortunate event occurs. The smart thing to do is to think ahead and get the stellar coverage and exceptional service ArtInsuranceNow.com offers. There are many perils that your art can be exposed to, some examples are:

Theft

Art trafficking is one of the most prosperous criminal acts. It has been so from ancient times and unfortunately, it still is. Having proper art insurance cannot replace what has been lost but it will help you recover your investment.

Damage

All types of art can be precious, but some are much more delicate than others. You can never be too careful when protecting your valuables. Misfortune happens and we rarely see it coming. Art pieces can be completely destroyed or get ruined and lose all value in many ways, here are just a few:

  • Floods,
  • Fires,
  • Natural disasters
  • Fraud
  • Heist
  • Inadequate handling

Transit

Most damage to art happens in transit. Yes, movers can destroy your precious items. Whether it is due to incompetence or simply by accident, movers can damage or destroy the items you care so much about. So, be careful when hiring someone to relocate your valuable pieces of art. A good practice is to have a list of questions to ask before making a final decision about who will perform your relocation. Ask your friends for recommendations and call at least three companies to see what they offer. You can even contact the nearest gallery or museum and ask them for advice.

Transportation of fine-art pieces is the riskiest part of the relocation, but your movers should also be careful when packing and unpacking. Preparing art for relocation is a delicate task and it should never be done under pressure. That is why you should never try to self-transport your valuable items. Hiring fine art movers might seem expensive, but can you really put a price tag on peace of mind? It only takes one mistake to ruin an important work of art.

Ask your movers to describe the entire moving process to you. Will they come and see your art pieces before the relocation date so that they can make a plan? What kind of materials are they planning on using? Is the moving truck temperature controlled? Feel free to ask whatever comes to mind. After all, it is your art collection and you have the right to know.

Having the combination of proper art insurance along with qualified art movers means that you can rest assured that your art is covered for unforeseen circumstances and is in good hands when being transported. Risk management is the best investment you can make, for an extensive collection or just the precious piece of art you inherited from a relative.

$60,000 Jeff Koons’ Sculpture Destroyed at Amsterdam Exhibit

One of Jeff Koons’ reflective “Gazing Balls” was shattered into pieces, after a curious visitor touched it in an Amsterdam church. The glass work was on display in an exhibition at Nieuwe Kerk (a 15th Century church known for its high-profile art exhibitions) when it was destroyed on the last day of the show.

In the “Gazing Ball” series the artist has taken 35 masterpieces, including Manet’s Déjeuner sur l’Herbe, Géricault’s Raft of the Medusa and Rembrandt’s Self-Portrait Wearing a Hat and had them repainted in oil on canvas, and added a little shelf, painted as if it had sprouted directly from the image and placed a blue glass orb upon them, as a follow-up to his 2013 series that balanced gazing balls on plaster sculptures.

The gazing ball was the centerpiece of the exhibition. A spokesperson for Nieuwe Kerk confirmed that a visitor had touched the glass ball, which immediately broke, leaving behind shards. The painting itself remains undamaged, and no one was injured.

Many risks are exposed to Fine Art during an exhibition, including those during the transportation of said Artwork. For the one-off or traveling exhibitions, we provide wall-to-wall coverage for items on display and in transit, this way your lenders can have the peace of mind that they are insured. Coverage can include:

Packing crates, catalogues & brochures, Items covered in transit, art in storage between transits, worldwide private & public venues, and touring shows. Coverage for items worth $50,000 up to $100,000,000

Nothing less than a comprehensive Fine Art policy supplied by trusted insurance broker ArtInsuranceNow.com / Bernard Fleischer & Sons Inc. for your valued Artwork will do.

Visit us at https://www.artinsurancenow.com or call us at 800.921.1008

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