Art insurance and intelligent strategies for insuring fine art

Insuring art

It’s hard to put a price on the expression of human thoughts and emotions transferred into the physical existence. It’s even harder to put a price on the financial protection of its loss.

Art insurance industry has a small amount of companies specialising in it. Fine art insurance requires art collectors to contact each and every company to get an estimate on insurance costs. It’s impossible to find an estimate or even a general guideline on the costs a collector would have to pay.

Like abstract art, abstract phrases are also often found in the materials art insurance companies publish. Yet, with Money Bear Club’s assistance, they all become clearer.

Find out how 6 art insurance companies in 4 different continents compare against each other, and why it’s important to determine which part of insurance coverage should be prioritised.

Fine art insurance coverage

Beginner art collectors, and those who have not previously looked into insurance as an option, often wonder how to insure artwork. Fine art insurance coverage is arguably the most important aspect to consider when choosing an art insurance provider. The basic coverage offered by insurance providers, includes protection against art depreciation happening because of human or natural negative output.

Basic coverage includes coverage against damages from natural phenomena, damages from illegal human activity, and damages from miscellaneous factors (handling, restoration). The most obvious worry of owners of art pieces is robberies. Yet, protection against natural phenomena should be prioritised.

It’s (almost) impossible to control the nature. But it’s possible to control the individual’s response to the potentially catastrophic events caused by it. Preparing, and being aware of the potential damages caused by natural phenomena, goes a long way.

It’s useful to create a risk analysis of all possible natural events that can damage artworks. Then, to choose the best fitting insurance coverage. It will help to decrease losses, and maximize protection against events that are impossible to control.

Simple things like heavy rain, and in extension, flooding caused by it, can damage art severely. That’s why protection against events like these is essential.

In countries and regions where the perceived level of criminal activity is higher than the world’s average, coverage from damages from illegal activities should be a priority.

Worries about miscellaneous factors affecting the value of an art piece tend to come as an afterthought. Fine art owners tend to underestimate how easy it is to damage an art piece, even if it is handled by a trained professional. Even if an owner prefers to not exhibit his/her art collection, handling and transportation of art pieces can hardly be avoided.

Additional protection against damage during handling only goes so far. Telling a restoration specialist to be “very careful” won’t minimize the chances of something going wrong during handling. Accidental human mistakes are very hard to predict and avoid. Thus, coverage against miscellaneous factors shouldn’t be an afterthought.

Advanced art insurance coverage includes automatic protection for new acquisitions and protection for art pieces during exhibitions.

Automatic protection for new acquisitions is a solution that reduces worries related to buying new art. Automatic protection enhances comfort in a sphere where stress occurs often.

Protection for art pieces during exhibitions is a multi-factor solution. It involves both protection against illegal human activity, and natural phenomena. Although this advanced protection is presented as a solitary coverage, it offers more value than it seems to have from a first glance.

Art insurance cost

The most simple structure, for analysis of art insurance costs, is made up of two parts. These are basic and advanced costs. Basic costs cover the most basic damage types, and advanced costs cover rarer and more advanced events.

Many advanced insurance coverage types are aimed towards events that happen very rarely.  Since more advanced coverage, as in any insurance, is often a field for insurance companies to improve the bottom line, using it (likely) isn’t necessary.

Pyramid of art insurance costs. Copyright: Money Bear Club.

Variable insurance costs are the costs that increase or decrease depending on the security state of the location, where the art pieces are housed. A security breach or a deterioration in the security measures of a location, will lead to a rise of insurance costs.

Minimizing variable art insurance costs is mostly done through increased security measures. It can also be done by increasing accident preparedness of household staff or family members.

It always pays to calculate whether increasing security measures, in a a bid to decrease variable insurance costs, is worth it. There are instances then it would likely be better to pay higher insurance costs. This happens if the security measures are at an already high level (security personnel on-site, CCTV), and the increases would be decorative (household staff training),

The higher insurance costs likely won’t come close to the sum that would have to be spent on additional security measures. From another angle, there is never too much security for valuables. Hence, increasing the security level, and saving money on variable insurance costs, would be a good deal.

An art insurance quote will also depend on the types of artworks being insured, and their actual or predicted monetary value.

It’s an unconventional view. However, solely from the point of insurance costs, famous artworks are more like liabilities, rather than assets. Transporting, securing, and insuring them, will quickly increase the amount for which they will have to be sold in the future.

The type of artwork for which the insurance will get taken out, will also affect the total art insurance quote. A fragile sculpture in an earthquake-prone area will be significantly more expensive to insure than an installation of textiles.

Intelligent strategies

One strategy for decreasing art insurance costs is shopping around for an art insurance provider. Another is using additional services of the insurance provider.

As with any other B2C business, insurance providers will provide a better quote, if they know that another company is competing for a possible client. Introducing this fact early on won’t do much, but doing it just right before a deal signed, should provide a good discount.

Art insurance providers also insure real estate and the contents in it, businesses, and other assets. Insuring jewellery and rare coins along with fine art, should net a better insurance quote than just the sole insurance of fine art.

Choosing an art insurance company

Money Bear Club has compared 2 American, European, Asian and Australian art insurance companies. The art insurance providers were compared by these factors: review positivity, variety of insurance plans, and additional services offered.

Comparison of art insurance providers. Copyright: Money Bear Club

Out of the 6 compared art insurance companies, Art Insurance Now (from USA) is a winner. Both in review positivity, and in plan variety, the company has achieved better output than its competitors. In Europe, Kuhn & Bülow offer the best additional services, and a higher plan variety. In Australia and Asia, Aon Risk Services and Charles Art/Insurance offer either better plan variety, or better additional services.

The majority (66.67%) of the compared insurance providers offer medium to very high plan variety. For art collectors who like to choose from a bigger amount of plans, this is good news. Fine art insurance in Australia and USA offers high plan variety.

However, even low plan variety doesn’t necessarily mean that a collector would have to accept a plan that does not entirely fit their needs. Companies which offer a lower insurance plan variety also offer highly customizable plans. This means that both high and low plan variety can be useful to art collectors.

Only a third (33.33%) of the companies had the necessary amount of reviews (or any at all), for them to be compared for their positivity. Reviews aren’t always true, and tend to over-represent the opinions and emotions of clients.

Reviews also make it possible to see the general attitude a company has for its clients. And, whether insurance requests are processed quickly. A low review score indicates that clients are more likely to put in more effort while dealing with a company, compared to a company with a higher review score.

Looking for best insurance companies is an important step in insuring art pieces. Nevertheless, even a company of an average quality can have a high quality fine art insurance policy. If a worst case scenario were to happen, the fine art insurance policy will matter far more than any add-ons.

Safety and silence

The best art insurance is silence. Silence about buying art, and silence about any artworks inside a house or a secure location. If zero outsiders know about acquisitions of fine art, then the probability of a robbery happening specifically because of artworks, drops to almost 0.

Robberies and heists can happen even if criminals have zero knowledge about fine art being inside a house or another location. However, information about valuable assets travels fast. If preventing a loss of assets only requires a very simple action, then not doing it would not be the most rational decision.

There are many art collectors who want to enjoy the paintings they buy, and hiding them from guests or outsiders in a house, is not an option. Every new eye that sees a priced possession, is one more threat to think about. People talk, and even if they don’t have bad intentions, the people they talk with, can have them.

In this scenario, it’s useful to take advantage of the fact that even the best art enthusiasts have difficulties with a)recognising copies and originals and b)identifying the real authors.

It’s very easy, and most people will believe that a copy, rather than the original, is hanging. While it may create a tacky reputation, it will be an easy method of avoiding potential security problems.

For paintings that do not enjoy mainstream public recognition, but have style-specific identifiers, it’s useful to claim that a different painter from the same time period is the author.

Artwork insurance value

Insuring anything, be it health or art pieces, provides protection against the impact of negative events. Monetary losses aren’t always avoidable, and insurance helps to cope with them.

Artwork insurance also has another valuable quality for its users. It can reduce worries and fears about the impact of negative actions of other individuals. It’s not a definitive solution, but a strong step towards it.

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