American collectors buy for passion & investment
A new Chubb survey shows some types of collections are on the rise that require unique insurance protection.
In the past year, Americans have not shied away from growing their collections even in the wake of the pandemic. In fact, based on the results of Chubb’s inaugural survey of American collectors, for some, the pandemic was a year of economic growth — with collections emerging as a desirable investment vehicle.
While true that collections can be purchased as investment vehicles, the real drivers for collectors are their passion and love of what they are collecting. The Chubb 2021 Valuable Articles Survey measured American collectors’ behaviors toward collection trends and risks and provided insights into what collectors value.
Wine and spirits collecting on the rise
Whether because of an increase in free time or disposable income, more Americans have recently started collecting wines and spirits, according to the survey. Specifically, it found that 40% of collectors, meaning those who self-describe as enthusiasts or collectors of various valuable collections in general (art, jewelry, watches, etc.), recently began collecting wine. Moreover, the survey discovered that 66% of all wine collectors recently started collecting wine, and 64% of all spirit collectors recently began collecting spirits, suggesting that many of these wine and spirit collectors are either new to the market or growing their collections.
There also has been an increasing crossover trend of new and existing collectors breaking into new areas of collecting they have not dabbled in before. The survey found that 46% of wine collectors recently began collecting spirits, and 51% of spirits collectors recently began collecting wine.
Regardless of whether wine and spirits enthusiasts collect these “liquid” assets for investment or passion, collectors should insure them with a valuable articles policy versus a standard homeowners policy. A valuable articles policy or a “floater” is more comprehensive and can cover risks related to accidental breakage, damage during shipping and transit, off-site storage, and power outages or mechanical breakdowns, as well as higher limits associated with theft, fire and water damage.
Riskier art purchasing decisions
Online auctions have been on the rise in recent years and further accelerated by the pandemic. In fact, according to the survey, 82% of art collectors have used an online platform to buy or sell a piece. In addition, 74% of American collectors have purchased or would consider purchasing art sight unseen. However, purchasing art without first seeing it can leave collectors open to potential risks associated with shipping and financial liability.
Risk begins the moment collectors purchase an item, even if they do not have physical possession yet. That’s why collectors must start the protection process the moment they buy a piece. For example, fine art should be shipped in a temperature and humidity-controlled environment. Collectors also should always use a certified and experienced shipping company.
Art collectors put preservation first
Chubb’s survey found that art collectors are most concerned with protecting their collections when considering risks to their outdoor sculptures while hosting a garden party (48% said they’d be “very concerned”), moving art to and from residences (42% said they’d be “very concerned”) and when loaning art to a museum (41% said they’d be “very concerned”). Damage to art in transit is one of the top insurance claims Chubb sees annually, so collectors are wise to understand that their fine art requires special handling and care, especially when being moved, packed and shipped.
Art, wine, jewelry & gemstones as investment opportunities
Some collectors are also driven by investments and find certain collectibles more valuable than others. The survey found that jewelry and gemstones (48%), art (41%), and wine (31%) are perceived to be the most advantageous long-term financial investment of collector respondents. In addition, according to the survey, American collectors would purchase jewelry and gemstones (47%), art (41%), wine (34%), watches (32%), and classic or collector cars (30%) as an investment if they had the funds to do so.
Whether individuals own fine art, jewelry, wine, spirits, collectibles or even classic cars, having a current appraisal is an important component of collection care. An appraisal can help ensure that a valuable item is insured to its current replacement value, thereby protecting against market fluctuations and value loss.
Tannie Ng (tng@chubb.com) is a senior art, jewelry & valuable collections underwriter at Chubb.
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