Insuring the finer things
Insuring fine artworks can be a dicey proposition even for carriers who work with experienced art experts.
Who owns history asked Robert R. Cargill, editor of Biblical Archaeology Review, in the May/June 2019, issue. The New York Metropolitan Museum of Art (the Met) had paid nearly $4 million for a golden coffin sometime after 1971. “The art dealer who sold the coffin to the Met presented phony documents making it appear that the coffin had proper provenance, including a forged Egyptian export license claiming the object had been legally acquired in 1971.” Upon learning this, the Met closed the display and returned the gilded coffin to the Egyptian Ministry of Antiquities. “Provenance” is the process of determining origin, ownership history and validity of a valuable art piece. Without such documentation, valuation becomes difficult.
When individuals, museums, libraries and other commercial entities buy or sell an important piece of art, book or other high-value items, they often seek insurance to protect their investment. This is usually an “all-risk” or open-peril policy except as excluded on the inland marine form called a “fine arts floater” covering the item wherever it is located or in transit.
When was the ‘loss’?
While Cargill doesn’t discuss the possibilities of insurance on the golden coffin, the story illustrates some of the problems encountered in specialty item insurance. What created this loss? Obviously, the Met was fraudulently induced to purchase the coffin, but it is still undamaged, not stolen, so “theft” per se is not the peril.
Further, in terms of a policy that is in effect in 2019, when did the “loss” to the Met occur? When it discovered the provenance was fraudulent or when the coffin was purchased decades earlier? If there had been insurance on the coffin when purchased, would it apply now, or would a current policy apply, if one applied at all?
The same issues would arise in any fine arts claim where an insured purchased an “old Masters” painting for millions of dollars decades ago, but now discovers it is a fake. Further, would the valuation be on what was paid years earlier or on the fact that the fake is basically worthless?
Many such policies require an “appraisal” of the item prior to insurance, and valuation may be at the appraised amount, but where the appraisal was in error (listing the item as original when it was only a copy), what does the policy pay?
Cargill tells of other similar “archaeological provenance” problems faced by museums all over the world. In 2008, the Met “had returned the Euphronios Krater, a 2,500-year-old Greek terracotta calyx-krater depicting a scene from the Trojan War, to the Italian government after it was demonstrated that it had been looted.”
Likewise, the Getty Museum in Malibu returned objects to Italy after it was determined that they had also been stolen, “including a second-century C.E. torso of the god Mithras, which had been acquired in 1982 from a private collection.” The Italian high court ruled in December 2018, that the Getty Museum also held a famed 2,000-year-old bronze statue known as ‘Victorious Youth,’” but the Getty is refusing to return the statue. And, asks Cargill, who owns the Rosetta Stone held in the British Museum, acquired after the British defeated Napoleon’s army in Egypt?
Insurers who write fine arts floater forms usually work closely with adjusters who have years of experience in fine arts claims and who fully understand what is required. For an adjuster who is assigned such a claim and lacks prior experience, keep in mind the nine steps of any adjustment: the investigation, evaluation and resolution of first the coverage, then the liability, and finally (and not before) the damages. A quick education in art, numerology, philatelic or whatever high-value item is involved, and the assistance of a qualified expert may be needed.
Ken Brownlee, CPCU, (kenbrownlee@msn.com) is a former adjuster and risk manager based in Atlanta, Ga. He now authors and edits claims-adjusting textbooks. Opinions expressed are the author’s own.
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