Last November Leonardo da Vinci’s Salvator Mundi sold for a record-breaking $450.3 million, and Simon Shaw of Sotheby’s recently said, “I think demand is at an all-time high at this point for the very best of the best. It’s a selective market,” with today’s collectors seeing art as a status symbol in addition to a smart investment. With rising prices come additional costs, and that includes the need to ensure that fine art is properly insured.
This need is not limited to private investors. Whether an art buyer is an individual, a museum, or any other kind of organization, art collections need to be adequately insured. Even if a collection is not expanding, there’s a good chance that the change in the global market has driven valuations up, and that means that coverage likely needs to be increased.
Some of the increase in values is a natural result of inflation, but much of it also has to do with a new generation of global art consumers. Traditional interest in art collections has expanded into parts of the world where interest had previously been untapped, and as buyers in India, China and the Middle East begin expressing interest and vying with each other for desirable art pieces, competition is driving the values sky high.
For both experienced art investors and those who are new to the market, it is important to understand where the risk of loss exists. Though many imagine that theft is their biggest vulnerability, it does not come close to the risk presented by moving and transportation. Where art that is hanging on the wall, whether in a private home or a gallery, is likely to have extensive security in place, art that is on the move faces countless risks, from shoddy packaging or handling, to accidents, to negligence. Other unforeseen events such as terrorism, vandalism and damage caused by natural disaster represents equally compelling and necessary reasons for making sure that fine art is adequately insured — particularly as climate change introduces new risks to collections located near flood zones, hurricane zones, and tornado zones.
Having a comprehensive fine arts insurance policy generally eliminates any concerns about deductibles and covers most events, including transportation, natural catastrophe, terrorism and theft. Premiums are based upon either the current value or market value of an item, as well as on where an individual piece is located and its vulnerability to each type of risk event. But even once a piece has been insured, it is incumbent upon the owner to stay abreast of changes in valuation, particularly as individual artists’ works grow in desirability, recognition and value
If you would like to discuss your own needs for fine art insurance coverage, contact us today to have an in-depth conversation with one of our professional staff members.