30 January 2020
Rare whisky, coins, wine, art, watches, coloured diamonds and classic cars have all seen well over 100% growth in the last ten years.
All outperforming many more mainstream investments such as the FTSE 100, according to Knight Frank’s 2019 Wealth Report. In particular, there has been significant growth in wasting assets – collectables such as cars, watches, wines and whisky, and guns.
These are expected to wear out over time, and as a result, are not normally subject to Capital Gains Tax in the event of a price increase. So it's important to understand what implications these factors have for insurance.
Check your values
It’s therefore essential you arrange a professional valuation of your valuables every three to five years. This allows you to keep up with rising and falling market trends to avoid under-insurance and over-insurance. (particularly inherited items where the true worth today isn’t known).
The myth about price
It’s often thought that insuring fine art and collections is very expensive. Of course, there are factors that influence the rating of a collection; where It’s housed, security and fire protection. Although the rating will be cheaper than your general household contents.
Collections are usually well looked after and are often insured for a specific value making the claim process easier. As a result, they benefit from a more competitive rate.
Avoid automated comparison websites
Insurance policies purchased online from comparison websites often have low single article limits of around £1,000 – £2,500. Meaning that anything over that amount must be declared or else it won’t be insured for its correct value.
Even then, many online providers won’t insure a painting or jewellery item over £10,000 in value.
Use a specialist insurance broker
An insurance broker has access to a carefully selected panel of insurers that offer specialist cover and high single article limits, often in excess of £15,000 within their home insurance offering. They will talk through the benefits of specialist cover over a standard insurance policy when insuring fine art and collectables.
If a painting is partially damaged, the cost to restore the item plus any subsequent depreciation in value of the painting as a result of the damage would be paid for.
If you're an avid collector, you'll want to know that your purchases are insured from the moment the gavel goes down at the auction house, or when you leave the gallery or jeweller. Such purchases are automatically covered and newly purchased and existing collections are insured worldwide giving you complete peace of mind.
Review, review, review
Don’t just let your insurance policy renew without taking the time to review your sums insured. Values may have changed since the last valuation, you may have acquired or disposed of items. You may even have had a lifestyle change that requires a different approach to the protection of your collections.
Private Clients Development Executive