Types of Insurance Coverage for Fine Art
Many insurance companies insure artwork, but your choice of insurance will depend on the amount and value of your art collection and also the kind of coverage you want.
Types of Coverage
There are two types of art insurance coverage that offer protection for a work of fine art: title and property.
- Title insurance insures against a defective title. For example, if the artwork was stolen or looted before you bought it rendering your title defective. Often an insurance company or division specializes in just title insurance. This type of insurance is important for high-value artworks that have passed through several owners or whose history is unclear.
- Property insurance, on the other hand, is similar to homeowner's insurance as it insures against theft or damage. If you have a regular homeowner’s or renter’s insurance policy, you might be covered up to your policy limit per item minus a deductible. For valuable art, you probably need a separate add-on floater to specifically cover it. Most insurance companies offer these floaters to supplement a policy.
If you have a significant piece or collection of art, however, you would likely be better served by a policy underwritten by a separate fine art insurance company. Fine art insurance companies cover a wide range of art, from artworks to antiques and from personal art collections to museums and businesses, including the works of artists in their own studios. The brokers at these companies are specialists who understand fine art and how to protect it. Even then, ask questions. Find a broker who understands the specific type of art you have.
What to Insure Against
When discussing your policy with your broker, make sure it covers a variety of situations that could affect your art such as fire, natural disasters, theft and damage from accidents at home and during transit. You also want coverage if you loan your art, such as for display at exhibitions.
You probably want a policy that covers both replacement, which covers the art if it is stolen or completely destroyed, and restoration, if there is partial damage that can be repaired. Another consideration is whether or not the insurance policy will reimburse you for lost value, such as if a required repair reduces the market value of your piece. Most experts recommend insuring art for its replacement value, not for the original cost. This involves getting your art appraised on a fairly regular basis, from once a year to every few years, depending on the nature of the work, because the value of art can appreciate over time.
Ensure the appraiser knows that the appraisal is for insurance purposes.
Of course, one-of-a-kind art pieces that are stolen or destroyed can’t be replaced; the Fine Art Insurance company says that the chance of recovery of art after a theft is less than 10 percent. But you do want to be compensated for your loss.
Insurance companies will want to see documentation of your ownership, an appraisal, receipt of your purchase, and photographs of the work. You also should provide a record of ownership if the piece has passed through several owners, which is known as provenance. The more official documentation you have, the better, when it comes time to file a claim.