In Part 1, we explored why standard household contents insurance isn’t built for art collectors—and what specialist policies offer instead. Now to help further with understanding art insurance policies, let’s unpack the technical details, common misconceptions, and real-world scenarios that make specialist art insurance an important safeguard.
What Specialist Art Insurance Covers (Part 2)
4. Flexible Cover for Growing Collections
Collections evolve—new purchases, sales, and gifts are regular occurrences. Specialist policies are designed to grow with your collection, letting you:
- Add new acquisitions before formally notifying your insurer (often 30 to 60 days’ grace)
- Adjust premiums annually based on changes in the value of the artwork or one’s budget and risk tolerance
- Insure individual works or entire collections
5. Access to Expert Claims Handling
If loss or damage occurs, expect additional support from experts and specialist activities such as
- conservation specialists which may assist with restoration efforts if the artwork is salvageable,
- listing works on art loss registers, and
- access to legal advisors familiar with the art world.
Key Terms in Art Insurance Policies
Insurance policies are legal contracts and they can be complex. As daunting as it may be, reading them comprehensively, and ensuring you understand (with the assistance of your financial adviser or broker) the policy wording will reduce the chances of tears and disillusionment when it comes to claiming in the event of a risk event occurring.
Here are terms to help with understanding art insurance policies:
Agreed Value Settlement: What you decide as the policyholder is the sum insured for an artwork. This means that one could also conceivably insure an artwork for a nil value if you are fine with receiving nothing in the event of the artwork being stolen or damaged. You may wish to track the value of the artworks in your collection to inform your decision as to what is the value you wish to be the agreed value as the sum assured – Capital Art’s packages can enable you to access the collection report to do so.
New Acquisitions Cover: Automatic protection for new purchases
Excess on Claims: Think of excess as your share of the bill when you claim. It’s the amount you pay upfront before your insurer covers the rest. Typically, the higher your excess, the lower your insurance premium. Many specialist art insurance policies do not have an excess applicable on claims, or a much lower excess than that on a standard household contents insurance policy.
Depreciation Protection: Coverage for artworks that lose value following damage and repair. In this instance, the insurer will pay the difference between the sum insured and the valuation following damage and repair.
Restoration and Conservation Costs: Full reimbursement or in-house services
Public and Professional Liability: Particularly for lending or exhibiting art
Death of the artist: If you’ve had an item valued, the artist passes away and then you have to claim (sometimes in a limited period following the artist’s death), insurers will pay an additional percentage of value (sometimes up to 50%), recognising that it’s now worth more.
Defective title insurance: Coverage protecting the policyholder against scenarios where they purchase items where they are unaware that the items are stolen goods so the seller does not have title to the items or if the artist attribution is defective, i.e. it is a fake. If it becomes apparent that they are stolen, are claimed by another owner or they are adjudged to be fake, this could potentially leave the policyholder with a considerable financial loss from the loss of the artwork, fighting legal claims and also reputational damage.
Art Loss Register: Art loss registers are databases of lost, stolen or looted artworks. They are created to reduce the incidence of defective title claims and are often checked by art fairs and auction houses before the listing of artworks at an art fair or auction.
Policy exclusions: Policy exclusions are provisions that waive coverage for certain types of risks or events. For example, many insurers have policy exclusions if an artwork suffers damage during the framing or reframing process.
Some insurers offer modular packages tailored to high-net-worth individuals, collectors, museums, and galleries
Common Misconceptions About Art Insurance
Many collectors delay seeking specialist cover due to these myths:
- “My collection isn’t big enough.” a single valuable artwork can be worth protecting.
- “I already have home insurance.” Standard cover often excludes critical risks or undervalues your art..
- “Specialist cover is expensive.” In reality, premiums are reasonable compared to potential losses—especially considering some policies start at just a few hundred rands or pounds per year.
Real-World Risks That Prove the Need for Understanding Art Insurance Policies
Examples from the art world make the need for proper cover clear:
- A Johannesburg collector lost artworks in a fire. The insurer covered both restoration and replacement.
- A Cape Town collector’s piece was damaged in overseas transit. Specialist insurance covered restoration and loss in value.
- A burst pipe in a UK townhouse destroyed rare prints. The pre-agreed valuation ensured a full payout.
- A collector bought a painting attributed to Marc Chagall at auction in 1994 only for the same auction house to send the same artwork to experts and have them determine that the painting is inauthentic when the collector wanted to sell the artwork in 2020. As a result of the determination, the artwork may now be destroyed by the painter’s heirs.
Final Thoughts: Protecting Art as Cultural Capital
Art is more than an asset—it’s a personal expression of taste and a reflection of cultural value. As the art market globalises, collectors must adopt professional risk management.
Specialist art insurance isn’t just for the ultra-wealthy. It’s for anyone who values their collection enough to protect it properly.
You’ve invested time, passion, and money into building your collection, don’t leave it vulnerable.
Consider specialist art insurance for your art collection today. Speak to a broker who understands your collection’s worth and can help safeguard it for generations to come. Contact us if you would like to be referred to a broker.