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Monet money: Insuring and protecting your art

Art and cultural property theft is a thriving criminal enterprise, with estimated losses running as high as $6 billion a year. Insurance experts suggest that owners of precious art and cultural artifacts follow some basic strategies to safeguard their property while it's still in their hands.

Get it insured

The process of insuring art is fairly simple, says Steve Brooks, president of B&B Premier Insurance Solutions Agoura Hills, Calif. You may be able to buy a special schedule or “rider” to your existing homeowner’s policy that provides extra coverage for a particular item, such as a Picasso painting. A rider’s premiums are based on the item’s worth. You also have the option of buying a policy specifically for the item from an insurance company that specializes in this type of coverage, such as Chubb, Ace, Chartis or Fireman’s Fund.

One bonus of adding coverage to an already existing policy, Brooks says, is that most companies charge no deductible if you do need to file a claim.

The determining factor for which insurance avenue to choose is typically the value of the piece.

insuring artwork

If you have a high-value piece, it may be better to get an inland marine policy to insure it, according to Howard Candage, an insurance agent in Portland, Maine. Despite its name, an inland marine policy has little to do with water. It’s a policy with an odd name that fills gaps in coverage -- for instance, fine artwork that might not have enough coverage under a traditional homeowner's policy.

So this type of policy covers a host of insurance claims that the average homeowner’s policy might not. For instance, under the typical personal property coverage, a $2,000 vase that’s part of an art collection might only be covered for its replacement value, or the amount it would cost to replace the item in the current market, depending on how your policy is written. This means that if the vase is broken or stolen, you might receive just $200, because that’s how much a new vase costs. If an inland policy states the vase is worth $900, that’s what you would receive after any applicable deductibles, according to Brooks.

Another benefit of an inland policy is that it has few exclusions, Candage says. Misplacing the item is covered, as is most any other harm that might come to the item.

Determine the value

An important first step to insuring your artwork and cultural property is determining its value. When you establish the value upfront, the claim is easier to settle if something happens to the item.

You need to have proof of the item’s existence and quality; Brooks suggests getting the item appraised by an art expert. Next, the insurance company and the policyholder can agree on a dollar amount for the item in question. In the event of theft, mysterious disappearance or damage, the owner will receive the agreed-upon amount if he or she has an inland policy.

Maintain the value

It’s not just thieves who threaten your art collection. Moisture, rodents and other elements can deteriorate an item’s condition to the point where an insurance claim might need to be filed, according to Norman Newman, head of the fine arts unit at HUB International Northeast.

Newman suggests taking following these five steps to maintain the value of your art and cultural property:

1. Perform an annual review. Ask your agent whether you have the right amount of coverage and whether that coverage takes into consideration security, transportation, restoration and warehousing.

2. Collect images. Make sure you have a “video diary” of your collection stored in a safe place that’s not in your home (in case of fire or theft).

3. Raise it up. All art should be raised at least 4 inches off the floor, whether in storage or on display. All art in bins, on shelves or in cabinets should be protected by water detectors to divert water away from the art.

4. Install smoke detectors. Make sure the area where you house your art, whether in storage or on display in your home, is equipped with a working smoke detector. Remember to change the batteries twice a year.

5. Secure it. Use Velcro to help keep paintings from shifting or falling off the walls. You may benefit from using hanging hooks designed to resist earthquake damage.

Take precautions

Experts suggest asking for references before hiring anyone to appraise, clean, transport or handle your art.

In February 2011, Kurt Lidtke, former owner of Kurt Lidtke Galleries in Seattle, was sentenced to four years in prison and three years of supervised release for conspiring to transport stolen property in interstate commerce, as well as for interstate transportation of stolen property. Lidtke had been going to people’s homes under the pretense of appraising their art. However, federal prosecutors said his aim actually was to get a feel for the homes and then return to steal the art.

Lidtke hatched the scheme while he was in prison, where he had been serving time for selling paintings that were on consignment to his Seattle gallery without telling or paying the artwork's owners.

Chief U.S. District Judge Robert Lasnik told Lidtke at his 2011 sentencing hearing: “You have tricked so many people into thinking you could be trusted to go into their homes or entrusted to sell their art on consignment … but the evidence shows you are a thief who thinks he is entitled to other people’s property and money.”

If a piece of art or your entire collection is stolen, Newman recommends getting on the phone as soon as you notice the piece missing. Notify your insurance agent, the police, the FBI (do not rely on local police to notify the FBI) and the International Foundation for Art Research.

In an attempt to recover stolen pieces -- and to bring the criminals to justice -- the FBI has a dedicated art crime team, consisting of 13 special agents and three special trial attorneys. This team runs the National Stolen Art File, a computerized index of art and cultural properties that have been reported stolen. Law enforcement agencies across the world can access it.

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