05 Mar COLLECTOR’S NOTEBOOK: PROTECTING YOUR PASSION

As residents of Los Angeles begin the complicated process of rebuilding after fires wiped out more than 16,000 homes and businesses, the last thing anyone facing that future wants to hear is that they weren’t adequately insured. However, a recent study by the University of Colorado Boulder found that three-quarters of people who lost their homes in the 2021 Marshall Fire that ravaged suburban Boulder County were not fully covered. In fact, one-third of homeowners were severely underinsured, holding coverage for less than 75 percent of their home’s value.

Tim Cherry, Rise and Shine | Bronze | 13 x 15 x 4 inches

For art collectors, purchasing and maintaining valuable artwork is both a passion and an investment. However, ensuring that your collection is properly insured is just as crucial as acquiring the pieces themselves. In light of recent natural disasters in Los Angeles, North Carolina, and Hawaii, the topic of insurance seems timely, if only to nudge readers into double-checking and confirming that their art collections and other valuables are covered. Here are some key factors collectors should consider when insuring their artwork against loss or damage.

How Major Disasters Affect Premiums

It’s safe to say that insurance premiums will increase no matter where you live. Insurance is a numbers game, with lots of people buying into a plan to spread the risk as widely as possible, and then the probability of loss is factored in. With recurring events like hurricanes and wildfires, many companies have come to the point where they simply can’t charge enough in premiums to cover the inevitable devastation. In Florida, for example, few insurance companies will cover structures built within 5 miles of the coast. In Los Angeles, more than a year ago, many insurance companies pulled coverage in high-risk areas for wildfires and mudslides because it’s not a question of “if” but “when,” and the risk was too high.

When this happened, state governments stepped in and created their own insurance funds. The problem with these funds, as one agent explains, is fairly fundamental: States’ asset-to-liability ratios are not held to the same standards and regulations as the insurance industry. If a state doesn’t have enough assets to pay out on claims, it will have to tap into other funding sources, essentially robbing Peter to pay Paul. On top of that, citizens often blame governments for being unable to protect them from disasters. In L.A., for example, lawsuits have been filed against municipalities claiming they should have had enough water to fight the fires. Legal battles such as these further drain the government’s coffers and can impede the payment process.

Read the Fine Print

It’s important to read the fine print of any policy. Not all insurance policies are created equal when it comes to artwork. Understanding the difference between agreed value and actual cash value coverage is essential. Agreed value policies guarantee a predetermined payout in case of loss, while actual cash value policies may factor in depreciation. Additionally, consider whether a named perils policy (covering specific risks like fire or theft) or a more comprehensive all-risk policy is better suited to your collection’s needs.

Some policies exclude damage caused by improper handling, war, terrorism, or natural disasters. Others may have limitations on coverage for restoration costs or partial damage, so be sure to clarify these details with your provider.

In the event of damage, an insurance policy should ideally cover full restoration costs and compensate for any loss in value after restoration. Some policies will only cover restoration but not the depreciation that results from the damage, so this is another crucial factor to confirm.

Art does — and doesn’t — fall under your general homeowner’s policy. At one time, art and jewelry were covered, but because people started gaming the system, companies capped the payout; some companies pay as little as $2,500 per artwork.

To ensure you are covered, you may need a supplemental “personal article policy.” These floater policies are fluid, meaning you can add and subtract objects without creating a whole new policy. The catch is that you need to provide and prove every item’s value.

As trustworthy as you are, you can’t just call your agent and give them the amount you need to cover your collection; you need an up-to-date appraisal. These appraisals document the replacement cost of artworks in your collection. So, if a work was lost to a natural disaster, you’d be paid the cost of purchasing an artwork of “like kind and quality.”

An appraiser will photograph the objects you want to be insured and provide a condition report documenting things like the artist’s signature, dimensions, medium, framing or base, and what, if anything, is on the back or underside of each piece of art. Then, they will analyze the market to determine the replacement cost of each piece if you had to buy it again.

Appraisals can be time-consuming and expensive, but once you have them done, your appraiser can update values on art that increase rapidly.

If you don’t have a lot of art to insure, you can also call the gallery where you purchased the piece and ask them to send you a current valuation document on their letterhead. They can substantiate the current market value if they still sell the artist’s work.

In a 2024 interview for Antiques and The Arts Weekly, Laura Doyle, senior vice president and fine arts and valuable collections product manager for insurance company Chubb, suggested that collectors with high-value items have appraisal updates done every three to five years; but for works in art markets that tend to appreciate quickly, Doyle suggests a one- to two-year revaluation.

Mitigation

The personal article policies on art tend to be surprisingly reasonable. Jewelry is another story — these items are easily damaged or lost because we wear them, and they are easier to steal than fine art. But fine art, once hung, is relatively safe because it is out of harm’s way.

With large collections of significant value, insurance companies have underwriters who will visit your home and create a report with suggested ways to limit risk. It’s good to use the same company you use for your homeowner’s policy because these policies should jibe, but also because if there is a fire or flood, the reimbursement process can be streamlined. But it’s best to call around or speak with a broker who can compare several companies to find the best coverage for you.

Some insurers may require collectors to implement specific security measures, such as alarms, climate-controlled storage, or secure framing. Taking these precautions can not only help prevent loss or damage but may also reduce insurance premiums. Mitigating loss is not only a good way to lower your rate, but it also offers peace of mind. Many great security systems integrate burglar alarms with fire, water, temperature, and humidity controls.

Interestingly, many companies no longer offer discounts for installing a sprinkler system in your home. The problem with these systems is that along with putting out the fire — a fire that may have been more easily handled with a fire extinguisher — they douse your entire home with water, which can destroy floors, furniture, and art, as well as soak your walls.

Insuring Art on Loan

It’s also important to insure art when it’s transported. A standard homeowner’s insurance policy often does not cover artwork in transit or on loan to exhibitions. If you frequently transport pieces for display or sale, ensure your policy includes protection for shipping, handling, and exhibition conditions. If you take a painting out on loan, for example, you need to have the gallery clearly state that their insurance covers the art in your car and at your home while you make up your mind. If not, your insurance will not cover any damage, and you could be on the hook should anything happen. Once you do buy something, however, it is important that you let your agent know so they can add that to your personal articles policy. Savvy collectors will call their agents before they take possession of expensive artworks to ensure they are covered.

Art insurance is a critical component of responsible collecting. By selecting the right policy, maintaining accurate documentation, and taking necessary security measures, collectors can protect their valuable investments from unexpected losses. Whether you’re an emerging collector or a seasoned investor, staying informed about art insurance options will help preserve both the financial and the sentimental value of your collection for years to come. Essentially, the best defense is — you guessed it, collectors — a good offense. Call your agent, go over your coverage, and take the next steps to get everything insured. Whatever you do, don’t wait until you need it.

Curator and writer Rose Fredrick shares her extensive knowledge about the inner workings of the art market on her blog, The Incurable Optimist, at rosefredrick.com.

Sidebar:

Many artists in L.A., North Carolina, Hawaii, and other areas stricken by wildfires, floods, hurricanes, and other disasters have lost everything — art, archives, supplies, and computers with their clients’ and gallery information. If you would like to donate or are an artist in need, check out this list of organizations.

Americans for the Arts: This organization provides a comprehensive list of resources for arts professionals on disaster preparedness and response. tinyurl.com/55zmj6h6

Artists’ Fellowship, Inc.: Based in New York, this nonprofit offers financial assistance to visual artists and their families experiencing an unexpected emergency, natural disaster, disability, bereavement, or extreme hardship. artistsfellowship.org

aSHE Fund: This advocacy organization supports and contributes to the sustainability of Black women creatives, including those affected by natural disasters. theashefund.com

Craft Emergency Relief Fund (CERF+): For 40 years, this organization has provided emergency relief for craft artists. They offer two types of grants: Emergency Relief, for artists affected by a disaster or emergency, and Readiness, which helps artists be better prepared to handle future disasters or emergencies. cerfplus.org

Grief and Hope: This group of volunteers — artists, gallery employees, and others — is raising money to distribute to artists and art workers who have lost their homes or studios as a result of the Eaton, Palisades, Sunset, and other fires in the Los Angeles area. gofundme.com/f/help-rebuild-the-lives-of-las-artists-and-art-workers

Heritage Emergency National Task Force: FEMA and the Smithsonian Institution co-sponsor this task force, which is a partnership of more than 60 national service organizations and federal agencies created to protect cultural heritage from natural disasters and other emergencies. fema.gov/emergency-managers/practitioners/environmental-historic/heritage-task-force

Los Angeles County Department of Arts and Culture: This organization provides a comprehensive, continually updated list of 2025 L.A. County wildfire recovery resources, including grants for artists and creative workers. lacountyarts.org/experiences/arts-and-culture-digital-resource-center/2025-la-county-wildfire-recovery-resources

North Carolina Arts Disaster Relief Fund: Operated by the North Carolina Arts Foundation, this organization is providing funding and assistance to artists and arts organizations affected by Hurricane Helene. ncartsfoundation.org/donate-nc-disaster-relief

Project Phoenix: This organization seeks to advance wildfire relief and recovery efforts for the Los Angeles art community. The project harnesses the goodwill of business and nonprofit leaders to raise and distribute funds, host informational webinars, and publish a directory of resources tailored to the art community. galleryplatform.la/projects/project-phoenix

The Adolph and Esther Gottlieb Emergency Grant: This program provides interim financial assistance to qualified painters, printmakers, and sculptors whose needs are the result of an unforeseen catastrophic incident. gottliebfoundation.org/emergency-grant

The National Heritage Responders: This organization responds to the needs of cultural institutions and the public during emergencies and disasters through coordinated efforts with first responders, state agencies, vendors, and the public. culturalheritage.org/resources/emergencies/national-heritage-responders