The art of in­sur­ing col­lecta­bles

A Stan­ley Pinker paint­ing sold for a record price in March, sig­nalling an in­crease in the value of col­lec­tions that can be cov­ered only by specialist in­sur­ance poli­cies.

RISKSA Magazine - - SHORT-TERM - Laura Owings

Arare and un­doc­u­mented paint­ing by the cel­e­brated South African artist Stan­ley Pinker set a new world record for the artist in a March auc­tion. The paint­ing, Love, caused a heated ex­change be­tween tele­phone bid­ders and buy­ers in a packed Strauss & Co auc­tion room, un­til fi­nally its lucky new owner walked away with the piece for R3.4 mil­lion. The piece was val­ued at R500 000. The sale is an ex­am­ple of the in­creas­ing value of ap­pre­ci­at­ing as­sets that bro­kers should take no­tice of, says Artin­sure man­ag­ing di­rec­tor Gor­don Massie. “Most in­sur­ance providers, in­clud­ing high net ones, don’t have ad­e­quate claims sys­tems for ap­pre­cia­ble as­sets like art and col­lec­tions,” he says, not­ing the in­fra­struc­ture of val­u­a­tion, dam­age as­sess­ment, restora­tive teams and re­cov­ery net­work em­ployed at Artin­sure. “Bro­kers who rely on house­hold in­sur­ance val­u­a­tions are not ad­e­quate.” Chris­telle Fourie, man­ag­ing di­rec­tor of MUA In­sur­ance Ac­cep­tances, agrees. “Stan­dard house­hold cover is not enough to en­sure that valu­able col­lec­tions re­ceive ap­pro­pri­ate amount in­sur­ance cover,” she says. Ac­cord­ing to her, stan­dard home­own­ers’ poli­cies usu­ally have a per- item limit or in­ner con­tents lim­its of, for ex­am­ple, 10 per cent of the sum in­sured, which falls far short of the full re­place­ment value for the collection. As a re­sult, it is bet­ter to have a pol­icy that pro­vides cov­er­age de­signed specif­i­cally for the collection should some­thing hap­pen to those dis­tinc­tive or rate items. But, the ben­e­fit does not stop there. She says the num­ber of spe­cial ex­ten­sions avail­able through such providers is also im­por­tant. “A specialist in­surer can pro­vide additional cov­er­age such as the de­pre­ci­a­tion of art, or even a pre­mium for the death of the artist, where the sum in­sured is au­to­mat­i­cally in­creased by 150 per cent in the year fol­low­ing the death.” In this way, Fourie says it is im­por­tant to ob­tain pro­fes­sional val­u­a­tion of the items at the in­cep­tion of the pol­icy. “A prop­erly doc­u­mented in­ven­tory of items and up- to- date val­u­a­tion cer­tifi­cates are the most im­por­tant as­sets when fil­ing a claim for valu­ables, as they are al­most al­ways a re­quire­ment by in­sur­ers at the time of a loss.” The ne­ces­sity of up- to- date val­u­a­tion records can­not be over­looked. Ac­cord­ing to Massie, the in­creas­ing value of pieces, such as the Pinker paint­ing, de­mands a re- eval­u­a­tion of the worth of col­lectibles. “Bro­kers whose clients have old val­u­a­tions may need to re- ad­just that fig­ure,” he says. The po­ten­tial need for restora­tion or re­pairs is an­other ben­e­fit of specialist in­sur­ance cover, Fourie says. “In the event of restora­tions or re­pairs on col­lectable items, specialist in­sur­ers typ­i­cally have con­tacts with ar­ti­sans and ex­perts who un­der­stand the value and del­i­cacy of the restora­tion process.” With the in­creas­ingly eclec­tic col­lec­tions of to­day’s mar­ket, a broader range of price­less items will need such specialist cover. While the big­gest collection val­ues are still in art, par­tic­u­larly oil paint­ings, Massie says toys, wine and whisky are cov­ered with Artin­sure, as well as more di­verse col­lec­tions in­clud­ing Star Wars me­mora­bilia and po­lit­i­cal ephemera. In­deed, a study from Bar­clays Wealth and In­vest­ment finds that high net worth in­di­vid­u­als are in­creas­ingly col­lect­ing such di­verse items. It also found that these col­lec­tors are as at­tached to their items as much as as­sets as pas­sion pieces. For this rea­son, many col­lec­tors may not seek to re­place their items in the event of a cat­a­strophic loss. “Some con­sumers have no in­ten­tion to re­place cer­tain valu­ables, es­pe­cially items that have been in­her­ited, as the true value is sen­ti­men­tal,” ex­plains Fourie. This as­signed value high­lights the key rea­son col­lec­tors need specialist in­sur­ance ex­per­tise, says Massie. “To all of our clients, their item is re­stor­able but not re­place­able,” he says. “That is a key prob­lem in the mar­ket, where in­sur­ers who are not spe­cial­ists talk about re­plac­ing items that are not re­place­able. Re­place­ment is not some­thing in our dic­tio­nary,” Massie con­cludes.

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