During the season of gift giving, homes are filled with new items — some of largely sentimental value, others expensive. A few are worth enough to cause the owner to think unsentimentally about adjusting their insurance coverage to protect against theft and other events.
Especially for high net worth individuals who have purchased jewelry, antiques, works of art and the like, a portion of the holidays should be devoted to assessing risk for loss, and ensuring that your insurance coverage is adequate. Don’t assume that you are not at risk; art is a high-value crime, with up to 100,000 pieces stolen each year at a value of up to $6 billion.[i] According to the FBI, more than half of the reported thefts in art, antiques and collectibles are from homes. The Art Theft Detail of the Los Angeles Police Department alone has recovered $121 million in stolen art since 1993.
For items like jewelry, antiques and artwork, there are many factors to consider. Here are some questions to ask when you contact your insurance broker.
- What does my basic policy cover?
- Specifically, are my high-value possessions covered for more than a minimal total?
- What kind of information should I provide to ensure these items are covered at their maximum value?
Most standard homeowner policies limit the amount covered for theft, no matter how valuable the item. Jewelry, furs and collectibles are often limited to a maximum claim of $2,000.[ii]
“Valuable Items” policies to cover your more expensive collectibles are available but again you should be aware of specific ceilings that may apply for individual pieces and blanket coverage. Such policies also provide for losing a stone from a piece of jewelry or other a similar loss. When you acquire a high-value piece, notify your insurance broker so that it can be added to your policy. If you already have a policy that covers extraordinary items, you may be covered for some loss for a short period of time, but such protection does not last more than a month or two without notification. When you are discussing a specific piece with your broker, be sure to talk about whether the item will be covered for the value at which you purchased it or for its future value, which might be significantly higher. Policies often require the piece to be appraised, with an agreed value shown on the policy.
Be aware that if you lose jewelry or fine art that is one of a pair or more, policies often require the remaining parts to be returned to the insurer in order to receive the full amount of the complete set.
USE THIS CHECKLIST WHEN YOU ACQUIRE VERY HIGH VALUE VALUE ARTWORK, ANTIQUES, OR JEWELRY
- Contact your insurance broker. Discuss your current coverage and determine whether additional insurance is needed.
- Is your policy for replacement cost or actual cash value? Generally, the price of replacement cost coverage is about 10 percent more than that of actual cash value, but it may be a better value in the long run.
- Keep a receipt. Give your insurer a copy of the receipt so that the company knows the current retail value of the item. Keep the original for yourself.
- Have the item appraised. It is important that expensive items be appraised properly. If you purchase a Valuable Items policy, you will pay a premium based on the appraised value and, in the event of a claim, be compensated for this dollar amount.
- Take a photo or video of the item. Keep a visual record of all of your personal possessions. If you use a video camera, you can also provide a verbal description of the item or collection. This helps to document antique and unusual pieces of jewelry, and speeds up the claims process.
- Maintain a home inventory. Start by walking through each room of your house with a notepad. Include items you might have in storage or on loan. Keep the list in a secure place so you can access it any time. The Insurance Information Institute, at www.insuranceinstitute.org, offers a computer program called “Know Your Stuff-Home Inventory” as a mobile app as well as a web version at the following website: www.KnowYourStuff.org where you to start your home inventory today.
More information is available at the Insurance Information Institute.
Protect yourself from theft
Bonnie Magness-Gardiner, an archaeologist who manages the FBI’s Art Theft program, points out that unlike traditionally manufactured goods, art and other collectibles don’t have serial numbers that can be tracked. Instead, the careful owner must maintain an inventory with detailed descriptions of the items, including the type of object, title, artist, date or period, materials used, measurements, inscriptions and markings, and any other distinguishing features. It is wise to take photos of each item. In the event of theft, a photo helps prove that the artwork belongs to you. Of course, keep the list and photos in a safe location away from the artwork. That will ensure you have the information in the event of fire or other damage.
If you do experience a theft, ask police to submit information about the piece to the National Stolen Art File run by the FBI. The request must come through a law enforcement agency accompanied by a physical description of the object, a photograph of the object if available, and a copy of any police reports or other information relevant to the investigation.
Another consideration when buying high-value artwork is title insurance. The art world is not particularly transparent, and in the United States, the owner of a stolen piece of art retains title, so a subsequent purchaser who buys in good faith will lose not only the art but the cost of the item. Title insurance reimburses policy holders for the value of works lost to title claims and attempts to determine the chain of ownership to make sure it is legitimate. Determine from the beginning whether the policy will cover the purchase price or appreciated value.[iii] The FBI maintains the National Stolen Art File that lists millions of dollars of still-missing artwork as well as recovered pieces.
An Annual Assessment
With the beginning of the New Year, Narver would like to review your current insurance policies to ensure that you know the risks of owning valuable art and objects and discuss whether you should and need upgrade insurance to protect your investment.
[i] Art Law, Fox Rothschild LLP, July 22, 2014
[ii] Insurance Information Institute. Don’t Let a Burglar Grinch Ruin Your Holiday; Protect Expensive Gifts with the Right Amount and Type of Insurance. Dec. 20, 2012.
[iii] Sheppard, Mullin, Richter & Hampton, LLP, June 5, 2009, Art Law Gallery Blog