Tens of thousands of collectors purchased fine art for the first time at auctions or art fairs this year. The global interest in high profile auctions such as the Elizabeth Taylor Collection and Michael Jackson estate and record setting growth of online auctioneer ArtNet added greatly to the ranks of the collecting community. While household insurance is enough for some of these collectors, many others need to know much more about their insurance choices. And many existing collections, including office buildings and residential complexes with dozens of owners, need to take time to make sure the large increases in art prices in 2011 does not leave them without enough insurance in 2012.
In an interview today, Scott Brady, leader of insurance brokerage DeWitt Stern's operations in California, reported good news and more good news for collectors who have recently acquired artwork form the Elizabeth Taylor Collection or other 2011 event. First, art insurance policies that are separate from conventional property insurance are not that expensive. Rates vary, but the cost for insuring a half-million dollars of art is often less than $500 a year. Second, unlike most auto insurance policies, it is fairly easy to negotiate special clauses that match the particular needs of individual art owners.
While art owners do not need a current market value appraisal within 60 days of a report the way that most financial transactions do, Brady recommends keeping appraisals current within two years. The double digit increases in prices for many kinds of art this year also means that many collectors now own art which is more valuable that the total content coverage of their regular property insurance. The most sophisticated collectors are already prepared for this with automatic coverage increases up to fifty percent. Owners of certain serigraphs and art glass which have double in price this year need to take some time away from holiday fun to make sure they have the coverage they need.
Museums often save on their annual insurance costs with a loss-limit amount in their policy. This approach kept the Huntington Library and Gardens covered for the 1994 Northridge Earthquake, which shattered dozens of ceramics, but left paintings unharmed. And museums also typically benefit from additional savings because of planning and security that has shown a track record of very low insurance claims.
Attention collectors! There is one more good reason to put comparing art insurance on your to do list for 2012. When you buy art at an auction, you own it as soon as the hammer falls. Art fair sales are usually the same.
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