Fine Art Insurance 101

  Yayoi Kusama, All The Eternal Love I Have for the Pumpkins, 2016. From  Phaidon .

Yayoi Kusama, All The Eternal Love I Have for the Pumpkins, 2016. From Phaidon.

You may have heard the horror stories - how Steve Wynn elbowed a tear in Picasso's "Le Reve" as he was showing the painting to friend or how a visitor in pursuit of a Yayoi Kusama Infinity Room selfie damaged a pumpkin prop. Having fine art Insurance can make or break (no pun intended) how these situations are rectified.

Most collectors and art businesses know that their regular homeowners or commercial insurance policies often do not extend to art, requiring the purchase of a separate, fine art-specific policy. This is necessary because in the context of art, owners who suffer a loss or damage do not want to (nor cannot) replace the piece of art, but rather restore the piece to its original state.

The importance of insurance during transit 

“Claims for damage in transit are generally the most frequently reported,” notes Blythe Hogan, Director of Aon's Global Fine Art Practice. It may seem simple: just hire a trusted transportation service to move your piece from point A to point B, and everything should be good, right? But then again, haven’t we learned that rarely is anything in life ever that simple?

Any time a work is handled, there is a greater risk for damage; claims for damage in transit are generally the most frequently reported. In addition to implementing the proper mitigation protocols prior to transit, such as completing condition reports and using professional art packers, confirming insurance is in place to cover works while in transit will provide financial protection for your investment in the event of a loss. This not only includes any loss in value, but also covers conservation costs and other handling costs associated with a covered claim.
— Blythe Hogan, Director, Aon’s Global Fine Art Practice

It is up to the collector or shipping party to do a bit of research to ensure works of art are insured while in transit. First, you must confirm that the shipping and handling service you want to hire offers insurance (some do not). Then, it’s important to read the fine print of the insurance terms, including the conditions and cost of coverage. This will vary based on the insurance carrier’s policies, each having different limitations and restrictions that can be confusing and misleading. For example, FedEx has a maximum declared value of only $500 for artwork, which is simply not enough to cover most damages. In addition, it is recommended to add extra days of coverage for any unknown delays that may (and often do) arise, to ensure coverage for the entire duration of your shipment.

With the global art market growing exponentially, the demand for international coverage is growing as well. Art fairs such as Art Basel or Frieze feature a large volume of art that is constantly changing hands across international borders. As a result, the risk of accidental damage or improper handling continues to rise, and as such, so does the amount of fine art insurance claims.

Limited risk vs. full risk

Where many collectors face problems is not understanding the difference between the types of fine art insurance offered.

Standard policies are often called “limited risk” insurance policies. These policies have certain exclusions and ultimately do not cover costs in many situations. A limited risk policy states that a payout may only occur under certain circumstances (some of which can be incredibly specific and unrealistic).

A “full risk” or “all-risk” insurance policy is highly recommended to provide coverage in almost all cases of damage, especially in transit (though there are still some exclusions such as ordinary wear and tear). Full risk policies cover any theft, accidental damage, and damage due to natural causes, such as water, fire, or extreme temperatures. Most importantly, full risk policies cover artwork in transit anywhere in the world, unlike many traditional policies. However, even with all risk policies, it is important to understand all terms and limitations up front before moving a piece of art.

While personal collections insurance contracts provide all risk, wall-to-wall coverage for physical loss, typically with worldwide territory limits, it is important to review each policy closely for sub-limits applied to the total value covered per one conveyance, endorsed exclusions pertaining to transit, or special deductibles applicable to losses in transit.
— Blythe Hogan, Director, Aon’s Global Fine Art Practice

ARTA transit insurance

A work of art is at risk for damage from the moment that a piece of art is lifted off a wall or display until the second that it is secured in its new location. Traditionally, an international shipment could be under the control of five or six different companies, and if there are damages, no one wants to claim responsibility. That is why proper packing, handling and storage is at the forefront of ARTA’s mission. ARTA works only with white glove, accredited fine art shipping companies and service providers, and thus we are a preferred shipping partner for numerous fine art insurance carriers and brokers.

For those that do not have a robust or full-risk fine art insurance policy but want to ensure their artworks are protected during transit, ARTA Transit Insurance can be added to any ARTA shipment. Our policy is held by Lloyd’s of London, and provides full risk, door-to-door coverage. Furthermore, our rates can be up to 25-50 basis points more competitive than other rates. We recommend insuring through ARTA as it will give us the greatest amount of ownership in the claims process, providing you with the most transparent and efficient service.

It’s never fun to deal with damages, but it certainly helps to have the A-team on your side. For more information and details on the terms and costs of our Insurance Policy, please read this article in our Help Center.