Is Your Art Protected by Your Insurance Policy? Are the Appraised Values Current?
In my recently completed appraisal assignments, four Andy Warhol screen-prints and one Warhol painting all had 20-year old insurance values as their appraised values on my clients' insurance policies. All five Warhol pieces had significantly increased in value since their last appraisals, and the difference in the current market value from the old appraised value for one of these pieces was $500,000.
In addition to evaluating the current market values of the pieces, the updated appraisals document the pieces' characteristics of value with complete descriptions and condition notes, to the highest standards, compliant with USPAP (Uniform Standards of Professional Appraisal Practice). This is crucial because in a the event of an unforeseen loss, it would be very difficult to use a 20-year old report description (most often just a few words and no photographs) and make the argument for what the piece actually was—after it is lost/stolen.
These weeks of self-isolation present an excellent time to reconsider and reevaluate the insurance on your collections:
1. Review your homeowner's policy
2. Understand your personal property insurance coverage limits
3. Review the process of a claim, and what is required by you, the insured, to be compliant with the insurance underwriter.
Reach out to your insurance broker and check when you last submitted insurance values for your personal property and what they require from you for the policy's renewal. Many insurance agencies recommend reappraising and reinsuring your collections every three to five years, regardless of the economy, in order to have the most up-to-date current market values on each work of art.
There are several ways to insure your personal collections, including the following:
1. Unscheduled Personal Property Section of the Homeowners Policy, which typically covers up to 50 percent of the value of the dwelling but has difficulty determining the value after a work is damaged or destroyed
2. Scheduled “All Risk” Coverage, in which each item is listed individually, breakage coverage for fragile items is offered, and new acquisitions are automatically covered for a certain period of time
3. Blanket “All Risk” Coverage, which has a per item dollar limit that varies by company, and in which the burden of proof of value falls on the insured.
Carefully consider which of the insurance methods is most appropriate for your collection. I am not an insurance advisor, but I have worked on a number of damage/loss claims that had very limited blanket coverage in place for their entire home's personal property contents. A Scheduled “All Risk” Coverage would have cost pennies on the dollar, and would have provided full insurance coverage on the any scheduled pieces.
While appraising collections, I have frequently identified artists of works, inconsistencies in descriptions previously documented (including misidentified mediums, which may have a huge impact on value), works requiring conservation, and works by artists with significant value changes in the current market. Oftentimes, my clients are pleasantly surprised at the current market values of the pieces of their collections. Do you know what the pieces in your house are worth and if they are adequately insured?