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Essential Advice for Clients Buying Art

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The global art market is vibrant — up 12% from 2016 to an estimated $64 billion, according to the most recent annual study conducted by UBS and Art Basel. Evidence of its vitality was seen this past December at Art Miami, a major international event sponsored in part by Chubb, where works by newcomers and established artists in a variety of genres were on display.

Many purchases were made at the Miami event, and regardless of the work chosen, every buyer faced the same practical issues of getting their art home, protecting it and safely displaying it.

These aren’t worries of globe-trotting billionaires alone. As viewers of the popular PBS series Antiques Roadshow can attest, homes across America contain art worth tens and hundreds of thousands of dollars. It’s fair to assume, therefore, that many of your clients own or are planning to purchase art that could represent a not insignificant portion of their total wealth.

Without becoming art experts, financial advisors can provide extremely valuable advice to clients by alerting them to the risks associated with buying, transporting, installing, storing and insuring artwork of all types.

Consider this example: On a trip to Europe, a client buys a painting for $50,000 at a Milan gallery. Is the purchase automatically covered by the client’s insurance policy? If the clients have an art policy, does the purchase exceed coverage limits? Who is responsible for damage or theft while the art is in transit home? When does “transit” begin and end?

If your clients’ current insurer has little or no experience in fine art and international shipping, a basket of unknown risks can land in your clients’ laps.

Here’s another situation: A client couple owns a home in New Jersey and a beachfront apartment in Florida. They decide to make Florida their legal domicile, and move many of their favorite art pieces to their condo. They have insurance for each residence, but through different agents and insurers.

Unwittingly, because their New Jersey policy has limits on art kept off premises, the couple is exposed to coverage gaps. They also face the risk of potential damage to their artwork when in transit and from its improper installation and protection in Florida, where harsh sunlight, sea air, and water and wind damage from a hurricane all pose threats.

All these risks can be identified and addressed if a financial advisor establishes a working relationship with a property and casualty insurance agent having specialized coverage experience. Inquiring about a client’s collection and buying intentions may lead to scheduling a discussion with a P&C expert, who can assess coverage and make sure there are no costly gaps or duplications, especially for clients insuring multiple residences in different states or other countries. Knowledgeable agents, who can make sure that clients take all eligible discounts, also can recommend quality carriers.

Insurers with experience in the art market can cover unplanned international purchases, for example, as well as offer input on safe and qualified shipping options. They also can assist with the proper installation, display, cleaning and conservation of artwork; as well as its temporary relocation and storage during a renovation, for example. They even can arrange for property managers to look after homes with valuable collections when clients are away, and suggest special home security systems to protect belongings, which can reduce premiums.

One or more of the upcoming global and U.S. art fairs and expositions may be on your clients’ 2019 calendars. If so, adding a quick question or two at client meetings about existing art and possible purchases may prompt discussions that clients and advisors alike will find rewarding.

Fran O’Brien is division president, North America Personal Risk Services, Chubb. She can be reached at [email protected]

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