Between art dealers, auction houses, institutions and private collectors, insurance and shipping are often among commercial galleries’ and museums’ biggest financial outlays.
But a new fine art consortium with a capacity of $1billion has recently been revealed by Hiscox and Ascot Underwriting. This specialist insurer’s big money scheme was created to streamline the process of putting huge fine art risks with Lloyd’s of London, and is appropriate for private and corporate collections, as well as museums and exhibitions. The premise of this move was driven by the rise in the number of billion and multi-billion collections that insurers have been seeing.
Naturally, insurance is an essential for such high value items as artworks and art collections, not only against theft, but also damage – particularly accidental damage in transit.
An unfortunate example can be drawn from a landmark fire in 2004, at art shippers and handlers Momart’s warehouse in East London, which destroyed around £50million of art. The disaster had an direct impact on art insurance rates and acted as a warning to insurers and collectors alike.
Risk exposure is assessed and monitored specifically closely by art insurers; an understandable attention to detail considering the sums of money involved. Warehouses, ports and museums are particular places that insurers remain wary of, given the abundance of risk that accumulates as such. Art fair premiums can also be high due to the collection of so many pieces under one roof. Galleries are affected too, as they often find holding millions of pounds’ worth of art on loan costs a small fortune in insurance.
In an effort to offset these heavy costs to institutions, the UK’s Government Indemnity Scheme offers some financial relief, by underwriting the risk on loans from private collections and non-national UK museums.
So, how much does it cost on average to insure artwork on-the-go? Well, the head of art and private clients at Hiscox Private collections’ insurance, Robert Read, estimates that a non-fragile work of art would be insured at 0.01% – 0.15% of its overall value whilst travelling overseas. This sum rises to 0.03% – 0.45% for a fragile work. The responsibility of insuring artwork can either pass from its owner onto the borrowing museum, auctioneer or gallery whilst it is in the public realm, or it can remain with the owner, but the premium can be assigned to the borrower in a short-term ‘nail to nail’ arrangement.
Whether lending to museums or simply on display in your own home, any private art collection is at risk of crime regardless. Given that Bloomberg reports 95% of art theft is from private residences, and below 10% of stolen art is recovered.
A big issue is that it’s not always discovered soon enough that art has gone missing, especially if it was stolen from a storage facility or basement. Interpol recommends owners’ compile inventories of collections with photographs and exact descriptions, as well as taking care to protect premises with security measures. Bearing in mind that such precautions will also strengthen any claim made to your insurers.
Make sure to protect your investments with a specialist insurance policy to suit your collection.