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Art Insurance: Insuring Your Art

"The Scream" and "Madonna," two major paintings by famous Norwegian artist Edvard Munch, were stolen in 2004 from the Munch Museum in Norway by armed robbers in broad daylight (and recovered in 2006). In 1990, approximately $300 million worth of art was stolen from the Isabella Stewart Gardner Museum in Boston, including a Rembrandt and a Vermeer. The significance of these art thefts is notable; the shocker is that in neither case was the art insured against theft (although it was insured for fire and water damage, for restoration costs that would be incurred to repair the paintings if they were damaged). According to a BBC news story at the time of the Munch theft, John Oyaas, managing director of the Munch Museum said of the two stolen paintings, "They are not replaceable so you can't buy 'The Scream' on the street and put a copy up there. The focus is on other issues than insuring them. To a certain extent this is common practice because these items aren't replaceable."

Now let's take a close look at that statement. Oyass appears to be saying that the paintings are so valuable, they're not worth insuring, or put another way, since the paintings are not replaceable, insuring them is a waste of money. This thinking makes absolutely no sense, especially in light of the 2012 Sotheby's sale of a Munch Scream painting for $120 million. The museum should have absolutely had theft insurance (assuming that's permissible in Norway); all museums should have theft insurance, as should all art galleries and private collections. Artists whose art is worth significant amounts of money should have insurance as well. Whether or not a work of art is "replaceable" is not the issue. Whether or not the museum can afford to replace a stolen work of art dollar for dollar with an equivalent work is not the issue either. The issue is getting compensated in some way if the art is stolen. What's better-- a stolen painting worth $100 million and a $5 million insurance policy settlement or a stolen painting worth $100 million and a $0 settlement because it wasn't insured?

"But theft insurance is way too expensive."

Yes, the cost of insuring a museum's entire collection or any large and valuable collection of art may well be prohibitive, but thieves don't normally steal entire collections. They only steal parts of them, and usually pretty small parts. So insuring the value of an entire collection is not necessary; insuring at least a portion of that collection-- even a relatively small portion-- makes a whole lot of sense. Theft insurance covers "incidents," not specific works of art, unless the insured specifies individual coverage for specific works of art in the policy. In other words, if you purchase theft insurance, you're insured for the coverage amount no matter what gets stolen. You may not recoup the entire amount of the loss, but at least you'll have something.

"But insuring even our few most valuable artworks is still too expensive."

So that's a rationale for not insuring anything? How about this idea-- pay for as much insurance as you can afford, maybe $1,000,000, maybe $10,000,000, maybe only $100,000. That way, if art gets stolen, at least you have at least some money to perhaps hire top quality private investigators to try and recover it, publicize the theft or perhaps even pay a ransom. Or use the money to buy a state-of-the-art security system for your museum (or gallery or private collection) so that a similar theft doesn't happen again. Whether or not art is replaceable or unique or iconic is irrelevant. Receiving some amount of compensation for a theft is what counts, and using that compensation to either recover the art, offset the loss in revenues that may result from the art being stolen, or make stealing art in the future so difficult for thieves, hopefully, that many will be deterred from even trying. That's what art insurance is about.

Insurance tips for everyone, public or private, including artists, who own or produce expensive art:

* Photograph and document your collection, or at least the most valuable works in your collection. Include current appraisals, original sales receipts, and any additional documentation or paperwork that speaks directly to the value of your art.

* Work with an insurance company that has experience and specializes in insuring art, collectibles, antiques and the like. They tend to be better at addressing claims than large all-purpose insurance companies because they understand how the art business works, how to value art and how to reach reasonable settlements (rather than dispute claims).

* When claim time comes around, some companies can be great to work with; some can be nightmares. Before you buy any kind of policy, check customer and client reviews to see how they handle claims. You do not want your insurance company to turn against you when claim time comes around.

* Buy as much insurance as you can comfortably afford, whether or not that amount covers the entire value of your art or collection. Most loss, damage, or theft affects only a portion of a collection, not the entire collection. To repeat-- receiving some compensation is better than receiving no compensation at all.

* Make sure you understand your insurance policy. This means reading the fine print, and asking every question about every conceivable type of loss, theft or damage situation that you can think of. You don't want to find out after a loss that you were not covered for that specific type of loss. For example, I once had a computer stolen while in transit from one destination to another. I contacted my insurance company to report the loss. They told me the computer was not covered. I asked what the additional cost would have been to cover the computer. They told me the annual increase in premium to cover $5000 worth of electronic office equipment was about $10! Had I known this when I purchased the policy, I would of course have added it on-- and did add it on the instant I found out.

* Theft/damage insurance for art added onto your home or renter's insurance policy generally costs in the range of $1-$3 annually per $1000 of coverage (less if you have a good security system in place in which case costs can be lower). Several insurance companies specialize in covering art and antiques exclusively. Coverage details and specifics can be discussed and/or negotiated with your insurance company.

There's no excuse for not insuring an art collection or at least a portion of it. If you can afford the art, you can afford the insurance. And remember-- you don't have to insure for every last penny of value in your collection. Loss or damage rarely affects an entire collection, and you'll find that in the large majority of cases, even partial coverage will reimburse you for a substantial percentage of the dollar amount involved in most occurrences or incidents.

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Disclaimer: This article should not be relied upon for answers to questions about insuring fine art. For complete and accurate answers, check with a professional insurance agent or provider specializing in art insurance.

(art by James Sterling Pitt)