How secure is your art piece?
Investment portfolios may fluctuate, but an investment in fine art has never been more of a calculated investment. However, protecting that asset has also become more of a challenge, despite vast improvements in security systems and techniques. A change in how we regard asset or ‘wellbeing’ protection as part of our life considerations has also altered our perceptions. Identifying how we view risk to our wealth and possessions is key to understanding the most effective method of protecting that wealth, and in particular fine art.
Consider this quote from Charles Hamilton-Stubber of Aon Private Clients: “In 1987, Van Gogh’s Irises sold for a record GBP27 million. In 1987, managing risk and insurance was mainly confined to a family’s tangible assets such as art collections. But this has now shifted as families have become more aware of the liabilities that threaten their wealth. Bearing in mind that in today’s art market the Van Gogh picture would probably sell in excess of USD95 million, what lessons can be learnt for family offices in the future?”
Protecting your assets
Thanks to advances in security techniques and the advent of systems that include everything from temperature and motion sensitive alarms, through to more co-operation and a greater understanding of the challenges faced by national and international law enforcement, the number of art thefts has actually decreased over the last 20 years. Now, organisations such as the Art Loss Register help to make cross-border co-operation much easier between police forces in the hunt for international art thieves.
Damage in transit has also declined, thanks to better packaging and transportation techniques.
However, there are still some areas that remain a concern for those involved in the financial protection of fine art. For example, the propensity towards natural disasters in parts of the USA (such as hurricane-prone Florida or the active earthquake zone of California) means that collections of artworks in some areas of the world are at greater risk of damage or destruction through the more unpredictable nature of our planet.
Insurance – the challenges faced by fine art collectors
It goes without saying that any piece of fine art – whether it’s a painting by a Dutch master or a piece of modern sculpture – needs to be insured. Whilst insurance cannot hope to replace the piece itself, it can give the owner some peace of mind knowing that their financial investment is protected. However, it’s not merely a matter of protecting the monetary worth of the piece, but also a consideration of more complex, 21st Century challenges such as kidnapping and ransom demands, or even the threat of terrorist action.
For particularly important works of art there is also the question of who is responsible for insurance if the piece is included as part of a public exhibition. Obviously, the owner will still have their insurance in place, but they will also need to speak to their broker and the exhibitors’ managers to find out whether allowing the piece to be displayed where the risks of theft are considerably greater will impact on their insurance coverage.
All of these questions should be considered when looking at insurance for fine art, and at the heart of a successful insurance policy lies a strong relationship between the customer and their broker. Never ‘assume’ that your artwork is properly insured, especially if it’s being exhibited. You could get a nasty shock if the worst happens.