Along with the immeasurable human costs of Hurricane Sandy, other costs are still mounting. Among these, Chelsea art galleries in Manhattan are still assessing the amount of damage to irreplaceable art that was on their premises when the flood water inundated the district on Monday night.
Those galleries are also worried about insurance premiums increasing, according to Julia Halperin’s article on Artinfo yesterday, but at least they have insurance.
At a conference that I attended last year, Dorit Straus, worldwide fine art manager at Chubb Insurance, said that it was hard to come up with reliable numbers because of the different ways in which insurance companies keep records, but estimated that the premium value of insured art globally was somewhere between $500 million and $1 billion. If those estimates are right, there’s a lot of uninsured art out there.
Straus pointed out that underinsurance was also a big problem, because plenty of people amass pretty large collections of art, antiques, jewelry or other collectibles, but relatively few have a firm grasp of what those collections are actually worth. Because people build collections out of love, she said, they often do not consider them with the same financial rigor that they would apply to other assets, and often just insure items for the price they paid for them.
Instead, people should be insuring items for their retail replacement value, which means getting an appraiser to assess art works or other collectibles on that basis every few years. That way, you can supply appraisal reports to insurers to ensure you have adequate insurance coverage, but also to ensure you have the evidence to support future claims.
Family offices are starting to employ art lawyers and art consultants, making their affluent clients more aware of the importance of valuation and insurance, but anyone who has art or collectibles worth more than a few thousand dollars needs to think about a specific policy floater to cover those valuables, because above that level, items are rarely covered on regular home contents insurance.
Your home insurers can provide this, but there are also plenty of specialist insurance companies that offer coverage for fine art, jewelry and other collectibles, so it’s worth shopping around to check the prices and the risks covered. Just make sure the policy offers protection against accidental damage and theft, and given the events of this week, that losses from fire and water damage are also included.