Art, wine collections require reading fine print on insurance policies
By GAIL LIBERMAN, Special to the Daily News
Saturday, October 03, 2009
It was a landmark case in the art world.
Casino magnate Steve Wynn, while showing off his Picasso masterpiece, La Reve, to friends, accidentally stuck his elbow through it. Among those who witnessed the embarrassing move: Broadcaster Barbara Walters and screenwriter Nora Ephron.
The result was a 2-inch gash in the painting and a $54 million lawsuit involving insurer, Lloyds of London. Wynn had claimed, based on published reports, that Lloyds initially downgraded the value of the painting he was planning to sell for $139 million to $85 million — despite the $122 million Wynn spent to repair it.
The case, originally filed in Manhattan's U.S. District Court, ultimately was settled. But it raises important issues to consider when it comes to insuring valuables.
Insurance policies for private collections no longer are plain vanilla, says Katja Zigerlig, assistant vice president of fine art, wine and jewelry for the New York-based Chartis private client group. Chartis is the rebranded global property-and-casualty business of bailed-out American International Group.
As the art market becomes more private and international, insurance policies have grown more varied, Zigerlig says. But you'll need to weigh the added pricetags of the various coverages you select.
"Diminution of value," Zigerlig reported in a recent talk to insurance brokers and financial advisers at The Brazilian Court, is one important feature to consider. It initially was a point of dispute in the Wynn case.
Say you chip or crack your sculpture. Unfortunately, you're not only stuck with a repair bill but also an immediate loss of value to your masterpiece. Chip a sculpture worth $100,000, and an appraiser, after you've had it repaired, might value it at $90,000. "Diminution of value" coverage would provide reimbursement for your 10 percent loss in value as well as the repair and restoration.
Other private collection policy coverages to examine: Catastrophic perils, such as hurricanes, earthquakes, flood and terrorism; coverage of newly acquired items; coverage for transportation — in case you bring home a piece of art, for example, from Russia; and arbitration in U.S. courts or abroad.
Wynn might have realized the importance of coverage for court arbitration abroad. Reason: Attorney trips to Great Britain cost a pretty penny.
Beware that if you're relying strictly on your homeowner's policy to cover your private collection, you probably have deductibles. Plus, policies generally limit your coverages and have exclusions for breakable or fragile items.
A growing concern both in art losses and wine losses is in adequate oversight of staff and contractors.
One art theft scheme by organized crime involved actually planting staffers — like nannies — as employees inside mansions to provide information on collections, Zigerlig says.
Screen your staff — including your gardener, electrician and nannies. Know how many have your security code and keys. Keep an up-to-date inventory of your collections and have current appraisals.
The overwhelming majority of those with wine collections lack insurance, she says. Yet, wine requires an unusual amount of care, including stable temperatures of 50 to 60 degrees Fahrenheit; humidity, preferably between 50 percent and 80 percent; a vibration-free environment and odor-free environment as well as proper security with locks and key codes.
One record $600,000 claim was paid to a client who, while in the Hamptons, had an electrician drop in to see whether the surround sound was working. In the process, the temperature in the wine cellar inadvertently was tripped.
Gail Liberman is co-author of several books with her husband, Alan Lavine. Their latest, published by Que, is 'Quick Steps to Financial Stability.' You may e-mail her at MWliblav@aol.com.
By GAIL LIBERMAN, Special to the Daily News
Saturday, October 03, 2009
It was a landmark case in the art world.
Casino magnate Steve Wynn, while showing off his Picasso masterpiece, La Reve, to friends, accidentally stuck his elbow through it. Among those who witnessed the embarrassing move: Broadcaster Barbara Walters and screenwriter Nora Ephron.
The result was a 2-inch gash in the painting and a $54 million lawsuit involving insurer, Lloyds of London. Wynn had claimed, based on published reports, that Lloyds initially downgraded the value of the painting he was planning to sell for $139 million to $85 million — despite the $122 million Wynn spent to repair it.
The case, originally filed in Manhattan's U.S. District Court, ultimately was settled. But it raises important issues to consider when it comes to insuring valuables.
Insurance policies for private collections no longer are plain vanilla, says Katja Zigerlig, assistant vice president of fine art, wine and jewelry for the New York-based Chartis private client group. Chartis is the rebranded global property-and-casualty business of bailed-out American International Group.
As the art market becomes more private and international, insurance policies have grown more varied, Zigerlig says. But you'll need to weigh the added pricetags of the various coverages you select.
"Diminution of value," Zigerlig reported in a recent talk to insurance brokers and financial advisers at The Brazilian Court, is one important feature to consider. It initially was a point of dispute in the Wynn case.
Say you chip or crack your sculpture. Unfortunately, you're not only stuck with a repair bill but also an immediate loss of value to your masterpiece. Chip a sculpture worth $100,000, and an appraiser, after you've had it repaired, might value it at $90,000. "Diminution of value" coverage would provide reimbursement for your 10 percent loss in value as well as the repair and restoration.
Other private collection policy coverages to examine: Catastrophic perils, such as hurricanes, earthquakes, flood and terrorism; coverage of newly acquired items; coverage for transportation — in case you bring home a piece of art, for example, from Russia; and arbitration in U.S. courts or abroad.
Wynn might have realized the importance of coverage for court arbitration abroad. Reason: Attorney trips to Great Britain cost a pretty penny.
Beware that if you're relying strictly on your homeowner's policy to cover your private collection, you probably have deductibles. Plus, policies generally limit your coverages and have exclusions for breakable or fragile items.
A growing concern both in art losses and wine losses is in adequate oversight of staff and contractors.
One art theft scheme by organized crime involved actually planting staffers — like nannies — as employees inside mansions to provide information on collections, Zigerlig says.
Screen your staff — including your gardener, electrician and nannies. Know how many have your security code and keys. Keep an up-to-date inventory of your collections and have current appraisals.
The overwhelming majority of those with wine collections lack insurance, she says. Yet, wine requires an unusual amount of care, including stable temperatures of 50 to 60 degrees Fahrenheit; humidity, preferably between 50 percent and 80 percent; a vibration-free environment and odor-free environment as well as proper security with locks and key codes.
One record $600,000 claim was paid to a client who, while in the Hamptons, had an electrician drop in to see whether the surround sound was working. In the process, the temperature in the wine cellar inadvertently was tripped.
Gail Liberman is co-author of several books with her husband, Alan Lavine. Their latest, published by Que, is 'Quick Steps to Financial Stability.' You may e-mail her at MWliblav@aol.com.
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