If you are fortunate enough to have a sizeable distinguished private whisky collection, you may want to consider insuring your investment. The valuation of premium whisky has been on the increase in recent years. A Scottish company that tracks the market, Whisky Highland, says prices for the 1,000 most-prized releases of single-malt Scotches have risen around 175% since 2008, based on auction figures*. In October 2016, auction house Bonhams, in Edinburgh, sold the most expensive bottle of malt ever sold at auction in Scotland. The rare bottle of Glenfiddich single malt whisky sold for £68,500 smashing the £25,000-£35,000 estimate.
Many might assume that their whisky collection will be covered under their general home contents policy. However, many household policies have low single article limits, meaning that they will not pay any claim for a single item that is worth more than on average, £2,000 in value. Even then, the cover might not recognise the insurance needs that a collection warrants. Bruce Stevenson are specialists in private client insurance with access to household policies that happily accommodate high value wine or whisky collections, or insurers who offer wine and whisky insurance in isolation with a specialist policy wording.
Below we detail some aspects that you need to consider:
Get it valued
The first and most important thing to do is to get your whisky collection valued by a specialist. A good specialist will create a detailed inventory for you with photographs of every bottle. Keep this inventory up to date, being sure to amend it when you buy or sell or even drink the contents! This valuation will help you establish the amount you should be insuring your collection for. Depending on the value of any individual bottle, the valuation may be needed in the event of loss or damage to quickly substantiate and evidence the value of those bottles that may be subject to a claim, enabling a quick, un-quibbled settlement.
Storing your whisky
To ensure the protection and preservation of any type of collection, be it artworks, clocks, stamps or whisky, you need to look after it properly. Store your bottles of whisky out of the sunlight and in a cool and dry place, up off the floor. Storing whisky in direct sunlight can result in the whisky lightening in colour and the labels fading. Many people store their wine and whisky collection together, often in a basement or cellar. These can be prone to flooding which is why it is important that the collection is raised from floor level. A flooded cellar will make the labels come off the bottles (the most important single element of identification of a whisky bottle), diminishing their value. However, with the correct insurance provision the cost to restore the label, plus any subsequent depreciation in value of the bottle(s) of whisky would be met. One insurer dealt with a claim where wine labels (although the same could apply to whisky) were eaten by snails that had crawled into the cellar. A standard household policy would not have paid out, since technically the product, the wine, wasn’t damaged.
A specialist policy would ensure that your whisky is covered, no matter where it is. You could have your collection at home or in a bonded warehouse. If you are buying from auction or direct from a distillery, upon purchase, the whisky is automatically insured for up to 60 or 90 days as long you tell your insurance broker within that timescale and the appropriate additional premium is charged if applicable.
What is not covered
Always read the policy wording carefully. There will be exclusions. Typically for whisky or wine collections, as soon as a bottle is opened cover in respect of that bottle ceases. In addition, loss or damage caused by inherent defect, wear and tear, gradual deterioration, insects, vermin, rust, corrosion, mildew, fungus, atmospheric or climatic conditions, or the action of light would not be covered. However, if damage was caused by extremes of temperature directly resulting from mechanical failure or breakdown of climate control units damaged by fire, lightning, a windstorm or an explosion for instance, cover would apply.
*WSJ June 2015