A painting by renowned artist SH Raza, valued at Rs 2.5 crore, was recently reported stolen from the warehouse of an auction house in South Mumbai. It was last seen in March 2022 and the theft was discovered in 2024 when the owner requested it to be auctioned. This incident highlights the importance of securing artworks.
Key risks and coverage
Expensive artworks, whether privately owned or displayed in public galleries, face various risks. “They are exposed to theft, fire, water damage, accidental damage, terrorism, etc.,” says Gaurav Arora, head of underwriting, claims, property damage and casualty, ICICI Lombard General Insurance Company. Natural disasters can also affect them. Besides, they can suffer from vandalism or mishandling during transport or display.
Art insurance offers protection against most of the risks mentioned above. “Purchasers of art insurance should read the policy carefully
“It is important that art insurance is comprehensive and that you can understand what it covers,” says Parthanil Ghosh, director and chief commercial officer, HDFC ERGO General Insurance. Art insurance is offered by a number of public and private sector insurers.
Important exclusions
Art insurance policies do not cover certain aspects. “Major exclusions include natural ageing, normal wear and tear, confiscation by authorities, consequential loss (loss due to secondary effects), etc,” says Arora. Intentional destruction and mysterious or unexplained losses are also not covered.
“Damage resulting from repairs, restorations and touch-ups is another exclusion,” says Ghosh. He adds that rust, oxidation, damage caused by moths or vermin, warping and shrinkage are also excluded. “Inherent defects, improper storage, handling and maintenance, price depreciation due to market fluctuations, political risks and damage are excluded,” says Ramit Goyal, head of distribution, Future Generali India Insurance.
Determining the value and sum insured
A certified appraiser with experience in art valuation usually determines the value of the artwork and issues a certificate. This forms the basis for the sum insured. “The appraiser takes into account factors such as the artist’s reputation, the condition of the artwork, market demand and comparisons,” says Goyal.
Cost of insurance
Ghosh says premium rates vary between 0.25 percent and 0.50 percent of the sum insured, with actual rates depending on the size of the collection, security measures and history of previous losses.
According to Arora, premiums can vary between 0.10% and 0.40%, depending on the specific risks faced by the artwork. “The premium depends on factors such as building security, frequency of transit in and out of India, coverage needs, quality of packaging, and risk mitigation measures such as fire extinguishers, burglar alarms, and CCTV cameras,” he says.
Goyal adds that the type of artwork, its condition, age, location and claims history all influence the premium.
Crucial buying tips
When insuring a work of art, it is necessary to have its value properly assessed by a qualified professional and to base the sum insured on that value. “Ideally, you should have an agreed value policy where the insurance company and the insured agree on the value in advance. This avoids disputes over its value in the event of a claim,” says Goyal.
Policies may have a deductible, which is the amount the policyholder must pay before the insurance coverage kicks in. “Policies without a deductible have higher premiums. Find the balance (between deductible and premium) that works for you,” says Goyal.
Finally, Arora suggests declaring all risks associated with the artwork in the proposal form.
– In case of theft, file an FIR immediately
First published: September 24, 2024 | 00:23 IS
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