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Insuring Liquid Assets

04 March 2019

2018 has been a phenomenal year for rare whisky. The first half of the year saw UK sales break all records with the Rare Whisky 101 index recording that £16.336m of ‘hard to find’ whiskies had been sold,  a whopping 46% increase on last year. By comparison, 2013 sales amounted to only £4.52m. Many of our clients collect rare whisky and with their investment increasing so rapidly they quite rightly want to protect it. Alexandra Richards offers a few pearls of wisdom on how to insure liquid gold.


At what point should a whisky collector consider insurance?

It’s really up to the collector when they want to transfer the financial risk of their collection to an insurer. There is no minimum value in respect of the policy we can provide in the UK. We usually find that collectors decide to contact us once their household insurance cannot accommodate the insurance of their collection. This is because several, if not all their bottles are over what is known as the ‘policy single article limit’ and therefore their insurer wouldn’t pay out on an insured claim for a bottle of whisky that has a value of £2,000 or more if, for example, £2,000 is the single article limit.


How do you determine the value of old, rare bottles?

Bruce Stevenson is an insurance broker not a valuer so cannot comment in any way on values for individual bottles or collections of whisky. Taking the advice from a professional valuer is always the best course of action. It is however important to ensure that you use a valuer with a good reputation. There are many forged and fake bottles of whisky in circulation  so you need to employ the services of a valuer with a credible CV.

Alternatively you can value your collection yourself by tracking bottles against various whisky indices or auction sites, but ensure you keep a full inventory, keep purchase receipts, track provenance and take photographs.
There are several professional valuers we could recommend to clients who are looking for assistance in this area. From an insurance perspective, the collection is always insured for its current market value.


Are rare, opened bottles of any worth?

Once it’s opened, the oxygen changes the molecular structure so in order to enjoy it for its full depth of flavour you need to drink it fairly quickly. With regard to insurance, as soon as the bottle is opened, all cover ceases.


How often should a collection be revalued?

Because the whisky market is moving so quickly we would recommend that our clients review their collection at least on an annual basis. For other collections such as fine art and antiques, usually every 3-5 years is sufficient. It rather depends on the make up of the client’s whisky collection. If it is extremely rare, then they need to keep a close eye on it.


What makes alcohol more difficult to appraise/insure compared to other luxury items like watches etc?

When valuing wine and spirits the same sort of criteria applies to alcohol as it does to other luxury items. A valuer would need to check the item’s provenance and condition. Both of these are very important factors as they will help the valuer determine whether the bottle has been tampered with and therefore the contents altered. Sadly there are many forgeries of rare whisky. Provenance goes a long way to authenticating the whisky. Glass bottles and the contents can be forensically tested also although expensive this exercise may be worthwhile when dealing with a rare bottle or case worth many thousands of pounds.


What are the most common ways in which you have seen people "lose" their alcohol collections and thus be thankful they had insurance?

Like most ‘collection’ risks, such as fine art or antiques, the most common insured loss is when an item is in transit. Usually this is because the collection has not been prepared properly for transit and inappropriate packing techniques have been used. Water damage is another cause. Many people store their wine and whisky collection together, often in a basement or cellar. These can be prone to flooding and it is therefore sensible that the collection is raised from floor level. A flooded cellar will detach labels (the most important single element of identification of a whisky bottle) and diminish their value. However, with the correct insurance provision, the cost to restore the label, plus any subsequent depreciation in the collection’s value, would be met.


Finally, have you any advice for someone wishing to start collecting rare whisky?


Think about your budget and why you want to collect. Speak to a specialist. Do your research. Provenance is everything. Buy insurance!

If you have any queries regarding Whisky Investment insurance please contact me

Alexandra Richards - Private Clients Development Executive
Private Clients Development Executive


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