Inventory report season is upon us
With the new year comes renewal of many insurance policies. For collections covered under scheduled policies – policies which require the insured to provide their broker a detailed list of works with recent valuations – this often means it is time to furnish an updated schedule of all insured artworks by location.
Beyond the basics like artist, title, medium and dimensions, which details should be included on that report? And what purpose does this report really serve other than fulfilling your obligations to the insurance company? We asked two experienced brokers, Mary Pontillo of DeWitt Stern and Peter Gosselink of HUB International to weigh-in on how these ordinary sounding reports can have a big impact.
Keeping up-to-date valuations
With scheduled insurance, each item is valued individually. As Peter Gosselink notes, “A scheduled value may be based off of a recent purchase price, appraisal, a value agreed upon between the client and the insurance company, or even an average of high and low estimated values derived from an auction house pre-sale estimate.”
However since the art and collectibles markets are constantly evolving, having recent appraisals for each work is an important step in assuring you are sufficiently, but not excessively, insured. Gosselink advises his clients to make certain that, “items valued over $100,000 have a recent appraisal performed to make sure that all values are up to date and the collector will receive the appropriate amount for their collection in the event of a claim.”
Knowing specifically where each work is located
This is one of the most often overlooked details. According to Mary Pontillo, “breakdown of values by location is commonly missing.” This matters because insurers need to think about accumulation of risk – where they have multiple customers’ property insured in the same area, for example, having many clients in the same hurricane prone beach town or consigning works to galleries in the same neighborhood. This information can dramatically affect the outcome of a claim. “Let’s say a water main breaks in Chelsea affecting galleries on a particular street, if my clients haven’t given me an updated list of what is in the gallery vs. in storage at another location I may not know if there’s $5 or $50 million dollars’ worth of art at risk” says Pontillo.
To the extent that insurers are able, they will ask clients to provide current information on where works are located so they can take steps to model losses that may arise in areas with a high density of insured works. Many insurance policies have limits or sub-limits for property located at any one address at one time. Crozier can assist you in managing this exposure by working with you to divide your collection between any number of our seven standalone art storage facilities.
Small details, like floor or shelf, can make a big difference
The elevation of the works can be a critical piece of information. Knowing that a work is stored on the 5th floor versus the basement makes a huge difference in risk associated with flood and storm damage. At Crozier this means for those facilities located within the FEMA determined 500 year flood plain we will not store works of art on the ground floor or below. Since we are tracking all objects within our warehouses down to the shelf on which they are stored, we can provide this level of detail in our reports to clients, giving them, and their insurers, peace of mind.
Not just for scheduled policies, a collections management best practice
As Gosselink points out, “Having up to date records of where your collection is located and the overall values of those works will help you better manage your collection.” While collectors with smaller collections may be able to get by with a simple list of their own keeping, Pontillo counsels, “beyond a collection of 50 pieces or so, or for very active collections or those with a high rate of transactions, the chance of inaccuracy increases.” And so she advises her clients with these mid-to-large collections to implement a program of inventory management and reporting. Management of such a system necessarily involves a regular review of specifically where and how items are stored or displayed.
Ultimately, all collections can benefit from regular reviews of inventory reports. Pontillo points out that all collections, including those with blanket policies simply need to make sure they know what they have in the event of a claim. “If there’s a total catastrophic loss, they need to know. If it’s gone, if there’s a fire and there’s no physical trace of what was once there, you need to know.”
Crozier can provide these reports for clients for all works in storage, to the level of detail outlined above. Contact your client services or project manager for more information or to request an inventory report showing the exact location of all your property in storage with Crozier.
Clients who use Crozier’s Collection Management service can have their entire collection tracked, including items stored or displayed outside of storage facilities, to provide a comprehensive report for insurers.