PatrimOne: protecting one's collection assets with insurance products

How to insure works of art and collectibles? What are the main risks? What solutions exist? Laurent Issaurat, Head of SGPB's Art Banking Department, met with Rémi Béguin, Managing Director of PatrimOne Group, an insurance brokerage firm dedicated to French and foreign private clients. Insight.

Rémi Béguin, Director of PatrimOne group  

Laurent Issaurat: Are private individuals generally well covered in terms of insurance for works of art and collectibles?

Rémi Béguin: As curious as it may seem, and without wanting to over-generalize, it depends in particular on the geographical zones and the local culture in terms of risk management. Latin people are much more fatalistic and often wait until they lose before reacting, unlike the Anglo-Saxons, who are more concerned with controlling life's hazards. Under-insurance or non-insurance also stems from the number of prejudices that collectors may have. Some think they are well covered without having analysed the limitations of their contracts. Others think that it will be complicated because of the necessary prevention and protection measures, that it is likely to be expensive, and that in addition to giving information on goods there is the difficulty of evaluation. All these bad reasons explain why in France far too many collections are very poorly protected and unfortunately it is on the day of the disaster that the findings are made.

LI: What is meant by "Collectors' items"?

RB: Everyone can have their own definition. As far as I am concerned, it is all "objects" that are recoverable and which, by virtue of what they represent, are insurable in order to limit or avoid any loss in the event of partial or total destruction. It is therefore necessary to have a broad interpretation, going well beyond works of art such as paintings and sculptures, and to include all the exceptional assets that constitute a heritage such as wine, old cars, period furniture, jewellery or watchmaking sets for example. These may be objects grouped in real "collections" in certain cases. In other cases, they are simply one or more objects of great individual value, justifying financial protection.

LI: What risks are covered?

RB: The idea is to have a very broad scope of the contract. The ideal is then a cover that protects against all risks and not only against perils such as fire, storm, water damage or theft/vandalism. An articulation that takes care of everything that is not directly excluded will make it possible to manage unforeseen events, offering a much wider scope of the contract.

LI: For works of art, we spontaneously think of the risk of theft. Is this the main risk?

RB: No, the most important risk is fire, knowing that it can perfectly well occur in very well maintained places. Carelessness, short circuits in homes with increasingly large electrical installations can be the cause, not to mention the spread from a neighbour. Before thinking about theft, water damage, especially when living in an apartment, is a major risk. Theft is more likely to concern certain types of works, but as it is associated with vandalism, it cannot reasonably be ruled out. Breakage may be the main risk for sculptures depending on the material used.

LI: Do all insurers offer similar solutions? Are there any leaders in the industry?

RB: No, not all insurers are interested in this niche market. Certain companies like AXA/XL, HISCOX and CHUBB have been present for many years, with very clear positioning and a strong ambition combined with a very distinct identity. Others, such as LIBERTY and GENERALI, want to strengthen their position beyond their home country.

LI: What advice do you have to protect your assets?

RB: My advice is to contact a specialist broker who will be present during each step to accompany the collector, define the levels of coverage sought and set up an adapted solution in terms of declared or approved value that takes into account all the particularities of the collection. He or she will identify the risks linked to the collection, analyse them and then manage them with the help of a tailor-made insurance contract. It is also the person who, in the event of damage, will be able to obtain adequate compensation and provide sound advice with the help of experts to safeguard and restore the works, or to study appropriate solutions in terms of prevention and protection.

LI: Sometimes assets are spread over several properties or even travel in the context of loans to museums. How can the dispersion and mobility of works be taken into account in this context?

RB: Cover can be applied worldwide, taking into account all situations so that there is no breach. Guarantees will be in effect during the phases of transport, storage, lending for an exhibition, or restoration. In particular, it is essential to think about effectively insuring any object of value that has to be transported from one place to another, since a move entails risks of damage due to physical handling, from the moment it is taken out of its initial location, to its installation and hanging in the place of destination, passing, of course, through the journey itself. The works can of course be guaranteed at the different addresses as long as the levels of protection are homogeneous. Hence, once again, the need to benefit from a specific contract that takes into account all needs.

LI : A collection evolves over time, how do you take this into account?

RB: New acquisitions can automatically be included in the cover with a delay to regularize the situation. The valuations of the insured objects will have to be regularly updated to take into account market developments -both upward and downward -by calling in recognised experts. These updates are important in terms of the general administration of a collection, but also - and above all, from an insurance point of view -in order to ensure the best possible compensation in the event of a claim.