(By Nalini S Malaviya)
Insurance of artworks is a fairly common trend abroad but remains a relatively new concept in India. However, it appears to be catching on as the number of collectors and investors has grown substantially in the last few years. In fact, now there are more companies who offer art insurance.
Why do you need to insure art? It is important to insure art against natural disasters, theft, fire or any other damage caused due to unforeseen circumstances. Museums, galleries and also private collections are now increasingly turning towards insurance coverage. Still, at the moment there are only a limited number of companies offering insurance for fine art. As premiums are high, most private collectors and investors shy away from insuring their collections. There is an urgent need for greater awareness and also friendlier policies that cater exclusively for art.
Reputed galleries ensure that their artworks are insured in transit but collectors and investors too should make sure they have an insurance cover when they lend out their works for public viewing. Else, any damage caused in transit or at the public site can cause an irrevocable loss.
It is important to document the collection appropriately through photograph, receipts, provenance certificates or any other related papers. One must go through the policy in detail to understand the fine print completely. Policies may vary according to the size of the collection, or in some cases one may want to insure only a part of it. Smaller collections or a few pieces could be covered as part of a comprehensive household insurance cover. Look around to find a policy that suits your needs.
The art collection needs to be appraised for its estimated value. Professional valuations can be done periodically to ensure it matches the market rates. Undervaluing the collection can lower the premium but in case of a loss or damage the claims will also be lower and the compensation may not be adequate.
When insuring, a significant criterion in selecting the insurance agent should be to opt for a company who has built a reputation of honouring claims.
(Published in Financial Times)