- Does Your Insurance Policy Cover Art Loss?
- What is Covered Under Art Loss Insurance?
- Types of Insured Art and Collectibles
- Types of Insurance
- What Art Loss Insurance Does Not Cover
- Other Issues in the Art Industry
- What to Do if Your Art is Stolen or Damaged
- How an Art Insurance Lawyer Can Help You
- Contact Nessler & Associates Today
More people are discovering the benefits of owning art as a store of value. The art market has made over $65 billion in sales in 2021, highlighting the strength of art as an asset class to collectors and investors. However, with art collections potentially costing their owners thousands or even millions of dollars, loss, damage, and theft are valid concerns for art collectors and arts organizations.
If you have insurance on an irreplaceable piece of art and it suffers damage, you can file a compensation claim. If the art insurance company denies or undervalues your claim, consult with an experienced art insurance attorney.
The art insurance lawyers at Nessler & Associates can help ensure your insurance provider honors the terms of your policy and covers expenses for loss or damage to your artwork. We can also provide valuable legal advice to creators and arts institutions regarding professional liability and civil claims.
Does Your Insurance Policy Cover Art Loss?
According to FBI estimates, between $4 billion and $6 billion worth of art is stolen worldwide each year. The art industry sees tens of thousands of items go missing, and insurance is a way for owners to mitigate investment risk.
However, many owners of artwork are unaware that their homeowner’s insurance policy does not cover the loss of art or other valuables. In the event of a fire, theft, or other disasters, your insurer will only reimburse you up to the maximum allowed by the policy, regardless of the piece’s assessed or sentimental value.
As a result, it is essential to purchase a rider to your policy that covers the loss of valuables like art pieces.
While the cost of a rider may seem like an unnecessary expense, it could save you thousands of dollars if a loss occurs. In addition, an insurance carrier may offer discounts to policyholders who purchase a rider to cover the loss of valuables.
What is Covered Under Art Loss Insurance?
Art loss insurance is a specialized form of insurance geared toward artwork owners. Coverage limits and exclusions vary by insurer, so it is important to read your policy documents carefully before purchase.
Generally, most art loss insurance policies cover theft, damage due to fire or vandalism, loss due to floods or natural disasters, and the disappearance of a work of art. In some cases, the insurer may also cover the cost of professional restoration services.
Many art owners choose to purchase special art insurance coverage that provides the financial protection they need to replace lost or damaged items. Art insurance policies typically cover accidental physical damage, such as fire or water damage and theft. Some policies also cover loss of value due to market fluctuations.
Floater insurance for artwork is an insurance policy for valuable items that covers easily movable personal property. While homeowners insurance will usually offer a maximum payout for valuables of $1,500, floater insurance can cover your valuable art piece after an appraisal confirms its worth.
Types of Insured Art and Collectibles
Many investors look to collectibles as a store of value. These artifacts include items such as:
- Photo collections
- Stamp collections
- Pottery and metalwork
Types of Insurance
Title insurance is a policy that insures against a defective item that may have been stolen or looted before you purchased the work. This type of art insurance is essential when high-ticket art is changing hands. If the custody chain is unclear, title insurance can help with ownership issues. You can also purchase property damage insurance, which protects your artwork against damage or theft.
Artist’s insurance is a necessary precaution for creators that exhibit their pieces in galleries away from their art studios. Insurance for artists covers the artwork’s transport and protects them from liability exposure while the art is on display.
What Art Loss Insurance Does Not Cover
Art loss insurance is a valuable tool for protecting your art from various circumstances. However, there are limits to the protection a policy can offer.
If your artwork sustains damage while on display outside your premises, an insurer will likely not provide coverage. This situation increases the risk of damage from the elements or theft and can leave you exposed to a loss.
Some policies also exclude expensive art over a predetermined limit. Check with the insurance company beforehand to avoid being left without adequate coverage.
A depreciating piece of art can cause your coverage to decrease in value. Remaining up-to-date with your artwork’s worth through an appraisal can help you understand your coverage needs.
Depending on the materials that comprise your artwork and how you store it, the piece may suffer wear and tear. An insurance policy will likely not cover general wear and tear due to fading, smudges, and other deterioration.
Consulting with an experienced art lawyer will ensure that you select an insurance policy with the necessary coverage for your items.
Other Issues in the Art Industry
Art collectors and art dealers need legal advice regarding a host of business issues that arise from their operations. For example, when one party loans art to another, the slightest discrepancies can leave room for litigation if damage or loss occurs. These details can become points of contention between artwork owners and insurers.
An art loan agreement defines the relationship between lenders and art institutions that exhibit the items for a predetermined period. In this case, an art insurance policy safeguards the borrower from damage or theft while the artwork is in their custody.
The gifting of pieces is a common occurrence for museums of art. Benefactors can make partial donations, monetary contributions, or engage in fractional giving to benefit from tax breaks. Damage or theft of items can complicate the relationship between the two parties.
Additionally, museums face the issue of securing the cultural integrity of certain items in their care. Cultural property law governs the display of items significant to cultures and groups of people. An art business or museum may face the risk of litigation if they house an ethnic or religious art collection and don’t uphold these laws. The ethnic or religious group can make a civil claim against the museum, costing it time and money.
An art insurance attorney can help find the right insurance for museums that routinely borrow or steward art pieces and protect these entities from potential litigation.
What to Do if Your Art is Stolen or Damaged
If artwork you own is stolen or damaged, the first thing you should do is file an art insurance claim. Filing a claim as soon as possible starts the compensation process. After filing, the insurance company will look into your claim to determine how much coverage you may be entitled to based on your policy, the piece’s value, and their claims adjuster’s assessment.
Depending on the art piece, register the loss with the appropriate databases. This includes organizations such as the Art Loss Register and law enforcement agencies like the FBI’s National Stolen Art File and Interpol.
Based on how your artwork was insured, follow the appropriate steps for filing your claim as the insurance policy dictates. Provide all documentation that proves your piece’s value. Any proof of purchase or the most recent appraisal suffices for determining the artwork’s value.
If your art has been damaged, do not move, clean, or handle the piece until the insurance adjuster assesses it. Avoid any actions that could cause the insurer to claim that you contributed to damaging the item.
An insurer may try to persuade you to settle quickly by offering much less than your artwork is worth. Working with experienced legal counsel can help you navigate the claims process and ensure you don’t settle for less than a fair amount. Calling an experienced attorney can give you the peace of mind and legal backing you need to recover or restore your beloved item.
How an Art Insurance Lawyer Can Help You
After filing your claim, you’ll need to follow up with the insurance adjuster, so they provide a progress report on your claim. Insurance companies present different obstacles for art owners that slow down the claim’s progress.
The insurer can call a valuation of your item into question as being out of date. The documentation regarding the art piece’s authenticity can also be a point of contention. Furthermore, the fine print in insurance policies governs the conditions under which you must keep your artwork. If they can prove you didn’t adhere to these policies, they may try to reject your claim.
A skilled art insurance lawyer can help you negotiate with your insurance company and stand up against their attempts to refute your claim. Your attorney can also help you seek maximum compensation for your artwork by providing proper documentation showing you followed all stipulations in the policy and verifying dates and appraisal information.
Contact Nessler & Associates Today
Whether you own an Andy Warhol piece, a Monet, or a painting from a local artist, damage or loss of your artwork is costly. An art lawyer at Nessler & Associates can help answer your art insurance questions and resolve any legal issue concerning your case.
Contact our law firm today at (800) 727-8010 for a free and confidential consultation.