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How are artworks insured?

Despite record sales and the growing success of exhibitions, the artwork insurance market remains limited. There are few estimates of the amounts at stake, especially for private individuals. Lloyd’s puts the worldwide total at $700 million (2013 estimate), an amount which includes the premiums paid by galleries, dealers, auction houses, museums or exhibitions, and private individuals.

How are artworks insured?

Any collections or artworks can be insured: stamps, wine cellars, books, classic cars, paintings, designer furniture, pictures, etc., especially in light of the fact that they are exposed to the same risks as any other property: accidents, water damage, fire and theft. And yet, contrary to popular belief, traditional home insurance policies are not sufficient. Once the assets reach a certain value – estimated by professionals at between €5,000 and €6,000 – owners are recommended to take out a specific artwork insurance policy.

Obtaining the right price

The services of an independent assessor are essential when assessing the value of assets.

Assessors make no judgement about the aesthetic aspects of an artwork but provide an estimate of the amount it could fetch at sale, on the basis of the most recent known sales and the estimated demand. If necessary, they may advise policyholders to take basic precautions (positioning, security systems, etc.). In addition, the value of certain collections is subject to fluctuation, which requires regular reappraisals and changes to policies (including the declared value): every three years for paintings, sculptures and contemporary art, and every five years for furniture, for example.

Two insurance purchase options are possible:

  • On an agreed value basis, which establishes the value of the artwork when the policy is taken out. Following an essential external appraisal, the policyholder and insurer reach an agreement concerning the authenticity and value of the property. In the event of a claim, this allows the policyholder to obtain the sum agreed in the policy without having to bear the burden of proving the value.
  • On a declared value basis: the policyholder sends the insurance company an accurate list of the assets and their estimated values. The premium will be calculated on this basis, but in the event of a claim, the policyholder must provide proof of their existence and have them appraised, which may be a source of conflict.

Reasonable premiums

The artwork insurance market features partnerships between major insurers and niche insurers. The cost of premiums varies from one insurer to another, of course. On average, they amount to between 0.15% and 0.25% of the asset value (e.g. premiums of between €150 and €250 for assets of €100,000) – reasonable amounts which are explained by the low level of claims on this market.

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