Art and Disasters: Understanding the Need for Insurance as the Threat of Disasters Increases



Nathan M. Davis is a partner and member of Pasich LLP’s insurance collection practice. Nathan has extensive experience in complex and high-profile litigation in state and federal courts around the country, representing clients ranging from luminaries in the entertainment industry to Fortune 500 companies.he can be contacted directly [email protected]

Hurricane Ian is expected to be one of the ten deadliest and most damaging Atlantic storms in recorded history. At the same time, the western United States, especially California, is experiencing unprecedented devastation from wildfires that are larger and more intense than ever before.

Thanks to the increasing scale and frequency of such disasters, it is becoming increasingly difficult to obtain insurance in some of the wealthiest places in the country, such as New York, Miami and Los Angeles.

And just as it’s becoming exponentially harder to protect property in some of the country’s wealthiest zip codes, the art market is stronger than ever.

The global interest in collectible objects seems to keep pace with rising global temperatures. According to Art Basel and UBS, global art commerce will grow by nearly 30% in 2021 alone, surpassing $65 billion. More than 40% of his business transactions were attributed to transactions in the United States.

As such, collectors own more valuable objects than ever before, but a pool of insurers willing to take the risk, especially in locations such as New York, Miami and Los Angeles, where objects are concentrated. We are facing the problem that is decreasing.

Below are some pointers for obtaining and maximizing art collection insurance in the current situation.

Consider products suitable for valuables

First party property insurance usually covers some personal property.

However, owners of valuables such as jewelry, fine art, and other collectibles often procure additional insurance through “personal item floaters” and “scheduled property floaters.” These types of coverage have been available for some time, but recently some insurers have offered products developed for collecting institutions (such as museums) for individuals who own many valuable items. starting.

Such museum policies typically insure collectibles against all risks of physical loss or damage, similar to floaters for personal items, but instead of insuring specific items, each We guarantee the entire collection without naming the item. Rentals and transportation are covered.

However, the museum’s policy is somewhat new. Collectors should therefore scrutinize the terminology to understand how the growth, exhibition, transport, lending and viewing of collections affect the availability of compensation in the event of a disaster. .

problem of location

As with property and casualty insurance, the availability of insurance may depend on the geographic location of the insured.

In areas prone to environmental hazards, particularly Hurricane Alley and other parts of the Southern United States, and areas prone to more frequent wildfires, policies often reduce available coverage.

Collectors should be aware of these limitations and consider where to store or display their work at any given time so as not to pay too little in the event of an environmental disaster.

Plan ahead to maximize coverage

Fluctuations in the art market show that the value of any piece can change significantly over time.

Therefore, collectors should regularly have their items appraised and their valuables photographed to document the value of their collections. there — both close-ups and whole rooms. This helps meet the stringent requirements of proof of loss commonly found in insurance policies covering valuable objects.

early bird. . .

Policies that cover valuables require documents to be lost promptly, sometimes within 60 or 90 days.

After storms and fires, these conditions are often not subject to the attention of policyholders, but it is imperative that losses are documented quickly and carefully to ensure that these conditions are met.

In addition, policies often contain restrictive clauses that require litigation within a short period of time, such as one year after the loss. Adherence to these requirements is essential to avoid loss of coverage.

Finally, as natural catastrophes become more frequent and claims increase, insurers become reluctant to pay claims. Acting quickly after a natural disaster can mean the difference between early claims resolution and lengthy coverage disputes with insurers experiencing resource exhaustion or payment fatigue there is. &

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