Over the years, you’ve started to invest in some artwork, fine wines, or have amassed a large collection of sports memorabilia. While the fun of collecting is in the searching, buying and enjoyment of your art pieces, there are other, less interesting things to consider when it comes to this type of hobby.
A semi-serious collector might spend hundreds of thousands of HKD on a vault to safeguard their most precious pieces, keep them behind glass in display cases or have alarms and different security systems installed to dissuade would-be thieves. You are passionate about these items and want to make sure that they’re protected. But on top of the physical and electronic protection put in place, you should also consider purchasing insurance as part of a ‘defense in depth’ strategy.
Do I need Fine Art & Collectibles insurance?
Although most people insure their personal possessions under a Homeowners Insurance policy, most have very limited coverage for fine art, memorabilia or collectibles. They might not cover the full value of your pieces or have many exclusions and restrictions. For example, in Homeowners insurance, there is a concept called ‘pair and set’ where if you lose one part of a pair or set, the rest is still considered to have proportional value. Meaning if you had a pair of Mohammed Ali autographed boxing gloves valued at $100,000 HKD and you lost one glove out of the pair, the insurance company would only pay you $50,000 HKD even though the remaining glove is now effectively worthless on the open market. As a result, any serious collector should purchase a separate Fine Art & Collectibles Insurance policy.
A stand-alone Fine Art & Collectibles policy will take into account unique situations that aren’t usually a factor with regular personal property. Fine art pieces are sometimes jointly owned or are only valuable as part of a set, they can also fluctuate wildly in value. On top of accounting for these unique factors in the policy wordings, these policies offer you coverage on an ‘all-risk’ basis anywhere in the world and even offer coverage while in transit.
For people with just a few valuable pieces, there is an option to purchase an endorsement to add coverage onto your Homeowners Insurance policy for an additional charge. Depending on how many pieces you have, this may be more expensive than purchasing a standalone insurance policy.
What to look for in a Fine Art & Collectibles policy?
At minimum, you want to make sure that the policy is offering you ‘all-risk’ coverage.
Another important consideration is whether you want coverage only while at home or do you want coverage to apply even while the artwork is in transit or at a temporary location not specified on the policy. This is important because it allows you to move the piece without having to inform the insurance company every time and would provide coverage while away on exhibition or while out for restoration.
It’s also important to note that naturally occurring damage, such as color changes due to light, age, or damage caused by natural humidity would not be covered.
How much does it cost?
Because this type of coverage is very unique, it’s usually custom tailored to your particular needs and costs can vary wildly.
For a detailed quote or to learn more about this type of coverage, contact us.
