DIFFERENT COLLECTIBLES CARRY DIFFERENT RISKS. MAKE SURE YOUR INSURANCE OFFERS THE RIGHT COVERAGE.
By Debbie Carlson ● Illustration by David DeGrand
While the causes of damage to collections are nearly universal – such as during transit, or from fire or water – certain environmental conditions and harmful handling can affect some collectibles more than others.
Your first step is knowing what your basic homeowner insurance covers, says M’Lissa Chumbly, lead account manager in USAA’s private member group. After reviewing your policy with your agent, you’ll be in a better position to determine if you need fine-arts insurance, sometimes called valuable objects insurance.
Most fine-arts insurance covers “open perils,” so there is a broad range of coverage for most all objects, says Elissa Gydish, underwriter/fine art expert at AXA Art Americas Corporation. But fine-arts insurance policies have their own exclusions, the biggest being wear and tear, such as fading, cracking, denting and other damage that occurs over time.
Every policy is different, so collectors need to understand what is covered and what won’t be under the wear-and-tear exclusion. For example, tread wear to a fine rug isn’t covered, but if red wine or bleach is spilled on it, that would likely be covered, Gydish says.
Insurance brokers can work with collectors to do a full evaluation on the potential risks to their objects and offer steps to prevent damage before a claim is ever filed, says Laura Doyle, vice president, collections manager, personal risk services of Chubb Insurance. “Brokers,” she says, “can advise them on insurance product recommendations, look at their specific needs and what they have in the collection to make sure that an adequate program is in place.”
COLLECTIONS WITH DUAL PURPOSE
Items that spend time both at home and are used professionally, such as cameras or musical instruments, have special considerations, Chumbly says.
Under a regular homeowner’s policy, musical instruments can’t be used for paid performances, Gydish says. AXA has commercial policies allowing this use, but some questions can arise if damage occurs. “If you’ve got an expensive violin and the original bow gets broken – I’ve seen that, oh my gosh, a handful of times at least. That’s a tough one because they’re very fragile.”
Vintage and collectible cars have their own unique needs. Autos insured against physical damage will likely have an endorsement that adds exclusions, says Blythe Hogan, director, global fine art practice at Aon Private Risk Management. While most collectors probably aren’t using their cars on a day-to-day basis, the cars need to be driven infrequently. Racing and timed rallies are excluded, so there’s no coverage if the car is damaged that way.
Policies often have age restrictions for drivers. Depending on the carrier, people under age 25 might be prohibited from driving the vehicle, and if damage occurs while they are driving, it may not be covered. “This is not to impose a lot of restrictions on a client, but it’s extremely important that a broker communicate [what’s excluded] based of the type of coverage because you never want to have a client say, ‘Well, I didn’t know that my son couldn’t drive it,’” Hogan says.
Gun owners often have large collections of both antique and modern firearms, adds Bob Brodwater, director, personal lines at Collectibles Insurance Services. “The nice thing about them, if they fall off the shelf they don’t break,” he says, noting that coverage is only for the property, not firearms liability.
The most common loss they see is theft from unattended vehicles. The owner may have more than one gun in the car and if the collector is hunting, the vehicle is usually unattended for several hours. “They will keep guns in their car more often than other types of collections. We ask if they are locking their car when they’re hunting or at the shooting range,” he says, adding that theft from unlocked vehicles is not covered.
JEWELRY AND SPORTS MEMORABILIA
Small items like coins, jewelry and stamps sometimes get special treatment under insurance, Gydish says, and policy rates may be higher because small items are easily lost or misplaced. Jewelry has an even higher risk level since it is meant to be worn outside the home.
Bent prongs and chipped stones are the most common accidental causes of damage to jewelry, says Jessica VandenHouten, marketing manager at Jewelers Mutual Insurance Group. When considering insurance, she says collectors should ask if they will work with experts who know jewelry if a piece becomes lost or damaged.
“Will you be able to get a replacement of the same kind and quality as the original?” VandenHouten says. “That’s important if you have a custom or brand name item.”
Both Gydish and Hogan say check to make sure jewelry has “mysterious disappearance” coverage, which covers loss in addition to theft. That also goes for coins and stamps, which can easily slip out of holders.
In addition to asking questions about how a collection is stored at home, Brodwater says they’ll ask collectors about how a piece is cared for in transit. That’s particularly important for small objects that might leave the house frequently, such as sports memorabilia or comic books.
“Many of these things are paper, or if it’s sports, a jersey or something like that. They get damaged easily, and loss of value is common. So we’ll ask, ‘What kind of traveling are you doing? Are you going to two shows a year or 50? How are you transporting it?’ Some [collectors] just carry them in a backpack and there can be substantial value in there. Since we’re going to be extending coverage to you wherever you go, we’ll want to know what type of activities are common,” says Brodwater, who adds damage arising from this transit is covered, even in backpacks.
Some collectors, especially those who collect older or fragile materials such as paintings, books or manuscripts, often think about restoring pieces. But be careful. Some collectibles are better left as is, in unrestored condition. If you decide to hire a conservator, vet him or her carefully and get a good understanding of what can be accomplished and how the restoration might affect the value of your piece. Conservators typically can give collectors reports on a piece’s structural integrity and advise on long-term preservation. “Damage sustained from repair or retouching, for example, if you sent it to a conservator and they restored the piece incorrectly, our policy would not come into effect,” Gydish says.
Collectors who are commissioning artwork or works-in-progress can benefit from policies that have automatic coverage up to a certain limit for those pieces, Doyle says. For collectors who aren’t sure if they’re ready to commit to a piece and take an object on loan or consignment from a dealer or a gallery, some polices will provide some type of coverage for pieces that are on loan to them.
Usually, valuable-objects policies don’t have a deductible, but some polices have them. Gydish says AXA has a deductible on commercial policies for vandalism on outdoor objects, especially if the pieces aren’t protected by a fence or other structure. Gydish recalls how she was thinking about possible damage while visiting Biltmore Estate in Asheville, N.C., for an outdoor glass sculpture exhibit. The exhibit simply had “do not touch” signs in front. The works would be protected as long as there was due diligence on behalf of the exhibitor, an attempt to provide protection, and there were no policy exclusions. Still, the potential for damage made her heart skip a beat.
“It was kind of scary,” she says, “because you’re looking at all these glass objects and you’re thinking, ‘Oh my gosh, what if it hails?’ So that, as an insurance person, was really scary for me.”
DEBBIE CARLSON is a Chicago freelancer whose work has appeared in Barron’s, U.S. News & World Report and The Wall Street Journal.
This article appears in the Spring/Summer 2019 edition of The Intelligent Collector magazine. Click here to subscribe to the print edition.