Insure? Sure!
August 18, 2013 3:19 PM   Subscribe

How does one insure fine art? A friend of ours recently inherited a piece of art. At the time they thought it was just a print and the estate valued it as just that. Turns out, it's the real deal! They have home owners insurance, but not sure if they should be getting something additional now that they know they have a seriously high value piece. They don't want to contact insurance company and raise a flag/ premium if it isn't something you normally do. So, I turn to the experts...
posted by MayNicholas to Media & Arts (13 answers total)
Yes, they should insure it separately. They should get it properly valued by an expert (who or where depends on the item) and insured. That may require a separate rider or insurance from a different company. Depending on the worth and the cost of insurance (and properly housing/securing the item-- is this a 1k piece or five figures?) they may find that donating it or selling it is easier if they don't like dealing with insurance companies or paperwork.
posted by jetlagaddict at 3:25 PM on August 18, 2013

Most insurance companies have a cap on the "art" covered under the policy. So, even if you have a $100,000 policy and your $50,000 painting is stolen, they might cover you only up to the art limit of $1,000 (or whatever; check the policy).

Consequently, it absolutely needs to be separately scheduled and insured. It's called a rider.

They should contact their insurer to discuss what they will require to write the rider. They will surely require a formal written appraisal. This will cost your friends money. Confirm that the appraisal will be acceptable to the insurer; they don't want to over insure a piece, lest they be defrauded. Once they submit the rider, the insurer will issue a policy.

I'm not sure what "seriously high value" means to you or your friends--but in my book, there gets to be a point where it's not worth the trouble of having in your home. If it's a $10,000 piece, sure, keep it close--but if it's, say, a $150,000 original drawing, I would keep it elsewhere, or sell it.

Also, they'll get it appraised at a gallery or auction house--make sure that the piece is being stored or shown properly--archival matting, UV glass, etc.
posted by Admiral Haddock at 3:33 PM on August 18, 2013 [3 favorites]

At the time they thought it was just a print and the estate valued it as just that

Although this is not your situation, some prints are quite valuable in and of themselves. Printmaking is it's own artform as well.

You can get a rider on most homeowner's policies for art.

If this piece is worth some life-changing amount of money, your friends might want to consider selling it. It could be damaged in a way that insurance won't cover, or the market price of it could drop. There is no guarantee it would appreciate in value.
The piece may have sentimental value, but if it was thought to be a print rather than an original, they might enjoy a cheap reproduction just as much. They might be able to have the piece photographically reproduced for their own use before selling it.
posted by yohko at 4:41 PM on August 18, 2013

Get it appraised. Artwork is a tricky area, and unless there is a consistent record of sales, the insurer will low ball you.
posted by lobstah at 4:55 PM on August 18, 2013

Admiral Haddock's advice is great. Your friend should look over their current policy carefully. If they suspect the work is worth more than whatever the limit on coverage for fine art would be with that policy, and it's a work that they like (which it sounds like they do), it is absolutely worth having the work appraised and insured with its own rider.

If your friend decides to have it appraised by an auction house (Christie's, Bonhams, Sotheby's, etc.), it might help to mention that it is for insurance purposes during their initial inquiry, or they may get a bit of runaround. (Auction houses receive lots of inquiries about mystery objects or objects of unknown value, and have procedures in place for intake and preliminary meetings about those, which are often complimentary. If they know that your friend wants the insurance valuation, which is a service s/he will have to pay for, they can cut right to the chase.)

If it is indeed a valuable work, it's also worth making sure that it's being stored properly. The best way to store a work on paper, like a print or drawing, is flat and in a cool, dry, dark place. (Obviously, though, that's not much use for viewing.) If it's mounted to a mat and/or framed, it's still best to keep it away from sunlight and to make sure that the paper and adhesive or hinges touching it are all made from archival-quality materials.

If it turns out that it is too much trouble to keep the work insured and well-preserved at home, and it's a work by a major artist (or even by an artist who's famous locally), your friends might also consider offering it on long-term loan to a museum that has a strong collection of similar works. (This is usually done with the understanding that the work will be a bequest.) While your friends won't make money this way, as they would if they sold it, there are tax benefits to doing so and the artwork would be more likely to be noticed by researchers or members of the public with an interest in it.
posted by Austenite at 11:40 PM on August 18, 2013

Last I checked, and this was for renter's insurance, but there it is fairly standard for art not to be covered by generic insurance policies like that, and must always be insured on its own or be covered by a rider on an existing policy.
posted by rhizome at 11:50 PM on August 18, 2013

They don't want to contact insurance company and raise a flag/ premium if it isn't something you normally do.

Well, this is actually the opposite situation. This is something you need the insurance company to know about, or they absolutely will not pay out if it gets stolen or destroyed. By contacting the company they will be able to secure appropriate coverage; of course, they will have to pay for that coverage, so their rates will probably go up.

By the way, this can also apply for more mundane items such as jewelry. So grandma's gold necklace with a real ruby? Yeah, get it appraised and noted on the policy. This would also be a good time to do your own home inventory, or at the very least, make digital photographs of anything important and maybe take a video room by room so you can provide proof of your loss. Naturally, back this up, say onto a thumb drive, and store that offsite like in a safety deposit box.

If it's an especially unique piece, it may even be advisable to seek out a specialty art insurer.
posted by dhartung at 3:12 AM on August 19, 2013

Before you decide to insure it, you need to know what it is worth.

Knowing the possible market value of the piece decides two things - how much of a premium you are prepared to pay and how/where you store it.

If you keep it you absolutely must insure the object itself, properly valued by an expert, rather than as a generic item under the home contents insurance if you want to get paid what the piece is worth in the event of loss/damage. You also need to go over the fine print of your insurance cover, even if you insure it separately. Insurance companies don't like paying out if they don't have to.

Expensive art can be a millstone. You either take the hit on your home insurance or you put it in a fine art storage facilty *and* pay insurance on top or find somewhere else for it (like a museum loan) or sell it. Storage and conservation is important - a quick way to devalue some pieces of art is to store them badly.

In short: like others above have suggested, unless your friend actually likes the piece and wants to display it in his/her home then selling it may be the most attractive option given the costs involved. Unless there is a compelling case that the market currently undervalues this art and its value may rise then liking it and wanting it out on display are really the only reasons for insuring it rather than disposing of it somehow.
posted by MuffinMan at 4:06 AM on August 19, 2013

Response by poster: Thanks for the input so far. This is what they said this morning:

Thank you for giving us a lot to think about. The value is enough for us to rid ourselves of 3/4 of our credit debt. The piece was chosen by us only because it was signed by the artist to our loved one and our loved one was very fond of this piece. The value by the estate was only on the autograph, but now we know the art is original as well. Selling is something to consider, but that seems cold because we would have nothing to show for it except paying fewer bills each month. Also, if other family members find out the value, can they come after us and demand we pay the estate for the proper value? No one wanted it originally because it was not valuable, we wanted it for sentimental reasons. Everyone had the chance to chose what they wanted. Now it is as though we got the winning ticket.
posted by MayNicholas at 6:33 AM on August 19, 2013

I assume that whether or not this would be a problem with the estate is a question for a lawyer and/or the executor of the estate. Keeping it as a way of remembering a loved one is a lovely idea. Regardless, if it's that valuable, they should get it properly documented and insured. If it gets ruined or stolen, the value it once may have had will be worthless either way.
posted by jetlagaddict at 6:47 AM on August 19, 2013

We added a rider on our homeowner's insurance for some original art that we own and I was astonished at how inexpensive it was. Its not musuem quality kind of money, but more than would fit on a credit card and I think it added between 5% and 10% to our insurance premium.
posted by Lame_username at 7:31 AM on August 19, 2013

You could consider having a Professional Giclee Print made of your original art work, keep the giclee print and sell the original.

I have not used the services of the linked company, am thinking of doing something similar.
posted by JujuB at 10:08 AM on August 19, 2013

that seems cold because we would have nothing to show for it except paying fewer bills each month

Your loved one would probably have been happy for you to be able to have greater financial security, pay off your debt, and be able to start saving for retirement.

If you keep it, basically you are paying all the interest you'd incur by still having the debt + the insurance costs as a fee for displaying it.
posted by yohko at 12:49 PM on August 19, 2013

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