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Homeowners Insurance May Need a Boost To Cover Fine Art

If you’re an art collector, you want protection for the value of your art and the ability to restore it if it’s damaged. Homeowners insurance policies typically provide limited coverage for “art, collectibles and antiques,” perhaps a maximum of $2,500. That likely won’t adequately protect your collection, or even one noteworthy piece.

Not all art is considered “fine art” for insurance purposes

While many people have art collections, not all expensive artworks are defined as “fine art.” For insurance purposes, fine art is different from collectibles and jewelry, both of which can also be quite expensive. Fine art generally encompasses investment-type, one-of-a-kind works that may also have some historical or artistic significance.

If in doubt, your insurance broker can help you determine whether your art is “fine” and guide you to the proper insurance policies and coverage amounts.

Coverage options

There are two types of fine art policies you can add to your homeowners insurance. Each offers protection for the specific work mentioned:

  • Title insurance: This protects you against a defective title, meaning your fine art purchase isn’t what you expected, or your ownership or title is questioned. Although fine art theft and fraud may feel like movie intrigue, it’s important to realize how easy it is to create counterfeits or steal fine art compared to other high-value assets. After a theft, any buyer in the chain of ownership can lose title to the piece, even decades after the theft. That includes the original buyer, who thought they were making a legitimate purchase. 

  • Property insurance: This provides protection against theft or damage of your fine art. Ask your agent about the situations the policy covers, such as loss or damage due to a fire or natural disaster, and accidents at home or during transit. Typically, wear and tear, deterioration and damage due to insects, vermin, wars and nuclear hazards are excluded. If you loan your piece out for exhibits or display it anywhere outside your home or the location specified in your policy, you’ll need additional coverage.

Protecting the artwork’s true value

Before finalizing coverage amounts, you’ll be required to document your ownership and secure an appraisal. You will most likely be asked for purchase receipts and photographs of the work as well. All this documentation is in your best interest. It provides the records necessary to support a future claim.

You will be asked if you want a policy that covers replacement and restoration. Replacement is if the artwork is stolen or completely destroyed. Restoration is if it suffers partial, repairable damage. Of course, replacing fine art isn’t always possible. The idea is to reimburse you an amount that would allow you to purchase a new piece of art of like kind and quality.

The appraisal of your art will help you determine an acceptable coverage amount. You can choose reimbursement based on the “original cost,” or the appraised value at the start of your policy. But that doesn’t allow for any increase in the artwork’s value. Therefore, most brokers recommend selecting “replacement value,” which allows for appreciation. Whichever option you choose, it’s important to have your artwork reappraised periodically to make sure your insurance keeps pace.

Extra services

Insurance brokers who specialize in fine art often offer additional services you may want to consider.

Some have underwriters and claims personnel with fine art expertise, which can simplify the documentation and claims process. Others provide loss prevention services. These often include a safety evaluation of your artwork’s display space and evacuation and storage of fine art during natural disasters, such as hurricanes or wildfires.

Whatever insurance choices you make, your policy details should be as unique as the art they protect. You’ve already invested significant financial and emotional resources into your art. That’s why choosing the right protection is so important. It will allow you to spend less time worrying and more time enjoying your art, whether it’s one special piece or many.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem.

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