Mother Nature has caused heartbreak and devastation in the past few months — California fires, Hurricanes Harvey, Irma and Maria — with immeasurable human costs. The costs are still mounting.
Underinsurance is a problem. Over time, collectors and people in general amass large collections of art, antiques, jewelry and other collectibles such as silver, glass, lighting fixtures, yet relatively few are aware of what the current value is. People tend to build collections out of love, and often do not consider them as a financial asset. Many take risks and assume everything within their walls will be covered by a general policy. For insurance scheduling, they often pass on the price they paid for a work or item to their insurance company, or even try to provide a value themselves. Time, trends and condition will change the value. Whatever the types of items in your collection, it deserves comprehensive coverage.
AN APPRAISAL REPORT IS YOUR DEFENSE AGAINST THE UNEXPECTED
When was the last time your collection was appraised? The primary market, even the secondary and tertiary markets, and stylistic trends all affect the value of a work of art and other types of items. For insurance purposes, collections warrant a retail replacement value — which means retaining a professional appraiser to properly assess a collection and provide a written report [See: Top 7 Things to Look for in an Appraiser]. Some insurance companies recommend valuations every three years. If you’re not a major collector with items in a volatile market, you can get by with less frequent appraisals. Remember: an outdated insurance policy likely means your collection is not adequately covered.
Anyone who has art, silver or collectibles individually or collectively worth more than a few thousand dollars should think about a specific policy floater, because above that level, items are rarely covered on regular home contents insurance.
W H A T Y O U C A N D O :
1) Choose an insurance company that has experience in policy floaters or specializes in insuring art, antiques and collectibles. These companies tend to be better addressing claims than larger, all-purpose types. They understand how the art business works, how items are valued and how to reach reasonable settlements.
2) To obtain adequate insurance coverage and ensure you have the evidence to support future claims, provide a written appraisal report for insurance scheduling;
3) Understand your insurance policy. Read the fine print and ask your agent about conceivable damage, loss, theft, fire or every natural disaster, as well as the particulars or each hypothetical event. You don’t want to find out after a loss that you were not covered for that specific type of loss.
Try to keep receipts of your purchases, not only for your appraiser but to establish the provenance.
Coverage can be crafted specifically to the unique circumstances of each situation — the type of art and items, the location(s) in which it is stored or displayed (e.g., private home, storage, corporate conference room), and the nature of the insured party (e.g., private collector, a museum or gallery, a large corporation).
Your collection is irreplaceable, and insurance can protect you, but you have to do it right.