Visual arts organisations must pay particular attention to their insurance protection, argues Peter J Staddon.
Art collections are big business these days and the bigger the business, the bigger the risks it runs and the more specialised the insurance it needs. For all types of organisations the need for insurance is paramount, but it is not simply a matter of insuring items and then hoping for the best. The insurance needs of an art collection are more complex, although they do follow some basic principles.
The good news is that, generally, this type of profession is regarded a good risk when it comes to insurance. The not-so-good news is that there is a lot to think about. It would be impossible to buy specialist insurance without understanding the inherent problems associated with the items at risk, especially if you exhibit away from the business premises. Many specialist insurance brokers would recommend prioritising the insurance needs of the buyer and these priorities may come as a surprise to some. The essential part is to cover the items themselves. But for what perils and for how much?
The perils are simple. Many specialist policies would cover the item for all risks of physical loss or damage. Therefore there would be cover for theft, damage by water in a flood or the remote loss by bits dropping off airplanes. But what about breakage of the item? Is the item brittle? For instance, many companies would term marble as brittle, whereas others would not. My view is, if I drop it and it will break, chip or fracture then one should insure it against breakage. Furthermore, there are items that increase in value in context. A pair of alabaster vases might individually have a set value. However, as a pair the value could be greater. In this case the sum insured should take into consideration the additional value that the pair makes. Therefore the loss of one would not necessarily provide half of the value at risk but would also include the diminution in value due to the loss of the twin.
Many private owners will allow their prized exhibits to go out on loan to a museum for the purpose of an exhibition. But who will be arranging the insurance cover whilst the item is being transported to and from the exhibition site and whilst on display? The museum and the lender must agree at the outset which party is responsible for insuring the item, at what point the insurance cover is to commence, and the value of the item but, more importantly, for what risks. Should theft be included, and would breakage of brittle articles be needed? It is not so long ago that major works by Henry Moore, weighing several hundredweight each, were stolen. The agreement for items on loan should be updated on a regular basis, especially if the item is on tour or on permanent loan.
Building insurance often comes next in terms of importance based on the principle that it is usually more important to arrange cover for the buildings than for the collection. After all, repairs to the building may be crucial in deciding whether or not the business can continue to operate. By contrast, the uninsured loss of part of the collection may not force a gallery to close. But without a habitable building a gallery may not be able to trade. This also goes for the private collector. Many items could be in specialist areas within a home. In that case there is a need to ensure that in the event of the home being damaged by an event, provision is made for the housing of the collection whilst the property is being repaired.
When added to the other costs of insuring a public-facing business, the array of insurance requirements and products on offer can be overwhelming. However, a specialist broker can guide you through the various options and find the best prices and the most appropriate policy. And, crucially, offer competitive premiums. n
Peter J Staddon is Head of Technical Services at the British Insurance Brokers Association.
t: 0870 950 1790;
e: enquiries@biba.org.uk