An Agent’s Guide to the Fine Art of Insurance

An interview with Mary Ann Avnet, vice president of Chubb & Son and marketing manager for Chubb Personal Insurance.

Q. In the current economic environment, does it make sense for agents and brokers to seek opportunities to sell insurance for fine art and antiques?

Avnet: Even now, many affluent Americans are buying fine art, antiques and expensive collectibles as part of a hobby or a diversified investment strategy. Increasingly, during this period of stock market volatility, financial advisers are viewing these valuable possessions as important components in a client’s overall asset base and estate, which need protection from various exposures to risk.

There’s a tremendous opportunity for agents and brokers to help their clients and even prospective clients fulfill this need by offering appropriate risk management information and insurance coverages. Research shows that many people are not aware of the limited amount of coverage they have for fine art and other valuables under a standard homeowners insurance policy. Regardless of their wealth, many clients do not realize that these prized possessions are drastically underinsured and inadequately protected.

A Chubb survey revealed that nearly one-third of thousands of respondents took no special measures to protect their valuable possessions. More than 80 percent were unaware that a typical homeowners or renters insurance policy provides only up to $1,000 to $2,500 in coverage for certain items, while about half of the respondents had not purchased higher amounts of coverage or an additional policy to protect their valuables. Forty-two percent of respondents weren’t sure what type of coverage they had on their valuable possessions or on what basis a claim would be paid.

The good news: Many survey respondents realized that they should discuss the insurance coverage on their valuable possessions with their agent or broker. Hence, we see a real opportunity to educate clients about appropriate coverage for their fine arts and other prized possessions. As a reward, agents and brokers can increase their revenues and at the same time build more meaningful, long-term relationships with clients.

Q. What type of coverage do you recommend for fine arts?

Avnet: Clients with extensive art collections should have a fine arts insurance policy, because homeowners policies generally will not cover broken or lost items, do not provide worldwide coverage, and have limitations on transportation and off-site storage.

There are essentially two types of fine arts insurance coverages: scheduled and blanket. With scheduled policies, each item is individually listed on the policy for a stated insured amount. Carriers usually require an appraisal or a recent invoice if an item’s value exceeds a specific dollar amount. This amount varies by carrier. Blanket policies are policies that allow a collector to obtain coverage of items without specifically itemizing the objects. Most blanket policies will include a maximum limit per item.

When choosing among insurance companies, serious collectors should also consider experience in writing coverage for substantial collections and whether the insurer offers value-added fine art services. A few carriers provide specialized services such as access to in-house collection management experts at no additional cost. An experienced fine arts insurer also should possess worldwide contacts, including appraisers, adjusters, conservators, packers, shippers and international warehouses. These contacts can be especially important at critical moments. In the event of a loss involving serious smoke or water damage, for example, having immediate access to an expert conservator can quickly stabilize the affected object, and in turn, possibly reducing reduce the amount of irreversible, long-term damage and loss of value to the artwork.

Q. How can an agent or broker get a client focused on protecting their fine arts?

Avnet: The best way to broach the subject of fine arts or other valuable articles coverage with clients is to suggest that they create an inventory of all their personal possessions, including paintings, sculpture, antiques, jewelry, stamps and coins, and even fine wines. The inventory should include descriptions, values, conditions and serial numbers for each item.

Keeping track of valuables, especially collectibles that are frequently bought or sold, can be a daunting task, however. A client might find this process easier with an online inventory management system, through which records can be accessed and updated at any time. One such system, which Chubb introduced recently, enables users to store digital images of an item as well as information on its location, appraised value, insurance history, and exhibition and loan activity. Users can also generate detailed reports.

With the data online, accurate records are immediately available for the recovery or claim process if a work of art or other valuable is lost or stolen. Plus, unlike physical records that can be lost or destroyed, these electronic records remain intact.

Once the inventory is completed, clients gain a clearer picture of how much they own. At this point, agents and brokers can help their clients focus on the best way to physically and financially protect those items.

Agents and brokers also should advise their clients to contact them whenever they purchase something valuable. They also should conduct an annual review of a client’s inventory, perhaps at the same time the homeowners or auto insurance policy is renewed. The entire inventory should be re-appraised every three to five years.

Q. How can an agent or broker continue to build their fine arts expertise?

Avnet: To further position themselves as specialists in insuring fine arts and other valuables, agents and brokers can establish referral relationships with fine arts appraisers and join local collector groups. They also can form relationships with insurers known for their fine arts expertise and that are willing to help educate agents and brokers on the needs of the affluent individual and avid collector.

Based in Whitehouse Station, N.J., Mary Ann Avnet can be reached at (908) 572-2692; mavnet@chubb.com.