How to: Insure your Fine Art, jewellery & other collectables
By Alexandra Richards, Private Clients Development Executive
Art, classic cars, wine and watches have seen a 179% growth in value over the last decade, outperforming many more mainstream investments such as the FTSE 100, according to Knight Frank’s Luxury Investment Index, cited in the 2014 Wealth Report. In particular, there has been significant growth in ‘wasting assets’ – collectables such as cars, watches, wines, and guns, which 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.
It is therefore essential that you arrange a professional valuation of your valuables every three to five years 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).
It is 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 is housed, security and fire protections, but 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, and so they benefit from a more competitive rate.
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.
A 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 are an avid collector, you will 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 piece of mind.
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 or you may have had a lifestyle change that requires a different approach to the protection of your collections. It is your responsibility as the policyholder to ensure your sums insured are adequate, not the insurers.
For any further information please contact Alexandra Richards at [email protected] or call 0131 553 2293