The benefits of separating fine art and specie from property cover

Fine art and specie collections can appreciate significantly in value over short periods of time. As a result, insuring these high value items under a general property insurance policy could result in the fine art and specie collections being underinsured in the event of a loss.   

Fine art and specie, particularly when they are of high value, tend not to be appropriately insured when included in general property cover as they often require more specialised attention. 

Understanding the different treatment fine art and specie require in the underwriting process is crucial to restore the value of these assets following a loss event. 

Advantages of insuring fine art and specie separately

There are several benefits to insuring fine art and specie separately. For starters, fine art and specie values move differently to property, as property value fluctuations tend to be more measured and predictable. 

Further, some of the artworks and specie items may be irreplaceable. Restoration of items requires a specialist restorer to carry out the work and minimise the loss in value. If restoration is not possible, (for example the loss is greater than 75% of value) the client may be able to claim a total loss. In such cases, insurers will normally keep the salvage. In contrast, other types of property can be more easily replaced. These two fundamental differences make it difficult to provide the specialist cover for items of fine art and specie together with other types of property assets under the same policy. For example, coverage of contents under a property insurance policy might cover the cost to replace the general contents (eg: on a new for old basis) but would not provide cover for restoration and loss in value as a result of the repairs.  

Insurance premiums for, fine art and specie cover is often more affordable than for property. In terms of saving money on any potential losses, the specialist nature of this cover gives the owner access to dedicated art loss adjustors, restorers, and valuers – essentially, all of the tools necessary to preserve the integrity of the unique objects and minimise the financial impact of a damage.     

One example of why separate cover is important took place in a Californian members club, where a collection of fine art and antiques required cover as part of the general property renewal. When included in the property cover, the fine art and collectibles insurance would include a deductible of USD 100,000 for each item. However, the art collection only had two items in excess of this deductible. As a result, most of the pieces would not be covered in case of a claim for an individual item. A tailored insurance solution for this fine art collection allowed our fine art team to place a separate specialist insurance for the collection with a lower deductible and cover which included the costs of restoration and any depreciation in value per item. 

Recommendations for insuring fine art and specie

Obtaining specialist fine art and specie cover requires more in-depth information on an inventory, resulting in more optimal pricing. When taking this cover out, ensure that you have the required information at hand. Examples include: 

• Proof of value – the first step any owner should take is gathering all of the necessary documentation for proof of value and other factors such as evidence of origin, a bill of sale, or the most recent appraisal. 

• Keep up to date – in the event where a claim is made, it’s important to have an up-to-date appraisal or valuation of the inventory to ensure any items are insured at the current market value. 

• Categorising inventory – grouping the items within the property being insured can help find the most appropriate cover. For example, they can be split into the following: 

  • Art dealers – paintings, drawings, sculptures, fragile / non-fragile  

  • Museum collections – medium, style, genre, production site, maker, time period 

  • Universities – books, art, manuscripts, archives 

  • Libraries – books, archives 

  • Religious institutions – valuable records/precious valuable items 

  • Real estate – art, jewellery 

  • Private clients – jewellery, art, all other collections 

  • Choose the right cover – fine art and specie collections will vary in size. The owner can opt for a blanket or scheduled policy. Blanket coverage means there’s no amount stated for each piece (unspecified) – there’s a total insured limit that applies to each piece in the collection instead. A scheduled policy (specified) is the opposite, where each piece has its own, insured amount. 

For more information, visit our Fine Art and Specie (opens a new window) page.

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