A guide to insuring precious works of art
THE month of February may be known for Cupids, hearts, the colour red, and all things romantic, but for art lovers and collectors, it is a highly anticipated month for an entirely different reason. The Investec Cape Town Art Fair has become an institution in the world of art. Celebrating its 10th anniversary this year, the three-day art exhibition takes place mid-February, and will unite collectors from all over Africa given that it is the biggest contemporary art fair on the continent.
“If you are an amateur or professional collector attending the show, you may invest in works by up-and-coming artists, or expand your own collection with unique and rare pieces by well-known artists. If so, it is important to think about protecting your art from the moment you fall in love with it,” says Tarina Vlok, managing director of Elite Risk Acceptances, a high-net-worth insurer and subsidiary of Old Mutual Insure.
She explains that many collectors often make the mistake of underinsuring their pieces, or even forgetting about insurance altogether. Insurance needs to be considered from when the transaction takes place to transportation, and then from how it will be displayed to where it will live.
“The reality is that throughout this journey, there are major insurance pitfalls investors make when collecting art, which can result in losses that many have shed tears over. It is always better to adopt the adage ‘It is better to be safe than sorry’.”
Vlok suggests checking with your insurer, or the establishment from where you bought it, that it is indeed covered during transit. It is also very important to inform your insurer where you intend to keep your piece, whether it is at a gallery or at your residential premises, as this determines where it will “sit” in your insurance policy.
She explains that some policies would allow the artwork to be covered under contents, but under this section you may not have access to special
extensions that cover you for specific losses.
“We get many situations where clients loan it out to a gallery and want to know if it is covered should it get damaged during the process. To this I always ask what the contract or arrangement is with the gallery. If, say, a gallery employee damages the artwork, does the gallery take any responsibility for it?”
And of course, it is important to ensure that your art is secure if it is valuable.
“The golden rule is wherever it is displayed, the security must be the same as what would be accepted at your personal home. You need to be as vigilant with your art as you would be with jewellery,” says Vlok.
She adds that artworks are vulnerable to water damage. In this case, it is
likely that your insurer would consider professional restoration first if it can’t be replaced by the artist.
“I urge collectors to familiarise themselves with their policy wording, as many insurers have policy exclusions if an artwork suffers damage during the framing or reframing process,” says Vlok.
If you own one or more pieces by an established artist, Vlok recommends getting a professional valuation done and compiling an inventory with the information about the artist and artwork, together with its value. This then needs to be submitted to your insurer to keep on file, and then an annual review should take place.
“This is to allow for it to be insured at the correct value. The value may need to be increased every year so that, in the event of theft or damage, it can be replaced.”
Vlok explains that if the artwork is specified in the Fine Arts and Valuables section of your policy, and the artist passes away, your insurer could pay up to 200% of the sum insured if it Is damaged. “But all of these special extensions require professional valuations to be done, which is why they are so important.”
Tips for art lovers
Below Vlok gives her top tips to those who want to protect their artworks.
● Don’t fall into the trap of undervaluing your collection in an attempt to save on the premium. This may cost you at claims stage.
● Remember that some art doesn’t appreciate, but it still needs insurance. Many professional sculptors make larger-than-life pieces, which are then displayed in gardens. How to insure such a piece? Speak to your insurer or broker to make sure it is covered. If you move and you take it with you, then it would be covered under your contents section. It is also important that your insurer knows you have art that is kept outdoors, and you would need to make sure that the piece is designed to live outside.
● If you are a serious art collector, make sure you are insured with an insurer that understands your requirements and has the ability to reinstate you after a loss.
[blob] Remember when you are hanging your art, use a professional, or take the necessary steps to ensure it is hung appropriately, and safely to protect the artwork.
● Lastly, maintain the artwork. If it is irreplaceable, ensure you treat it as such.