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December 2, 2011
Insurance Advice for Collectors
Wealthy collectors invest in fine art, wines, sculptures, jewelry and more. Financial advisers can find stronger methods of protection for their client?s investments in collectibles. Many investors simply include their collection items in a homeowner?s insurance policy, but direct insurance coverage could be a stronger protection for the items. Direct insurance emphasizes risk management and loss protection on these irreplaceable items.
The Journal of Financial Planning provides tips for collectors of art, wine, jewelry, and collector cars.
1. Art
- Clients should look for insurance policies that protect their art worldwide, that provides a grace period immediately after purchase in which the art will still be protected, that provides care, custody, and control coverage, and that provides catastrophic event coverage.
- Collectors can search the internet to be aware of when similar works are selling for more or less than current insured value and update the appraisal.
- Get all agreements, valuations, and insurance agreements in writing.
- Fill out a condition report before transport of any kind and package carefully.
- Consult art handlers about the best way to install their art.
- Provide proper lighting for the art.
- Create an emergency plan for the art if there is a natural disaster.
- Clients should seek advice on how to manage and transfer their high-value collections at death.
2. Wine
- Clients should look for insurance policies that have coverage for mechanical breakdowns, worldwide coverage, coverage for transport of wine bottles, and a grace period immediately after purchase in which the wine will still be protected.
- Do the work upfront to set up a system for storage so that you can leave it alone to age on its own later.
- Have a security system to protect the cellar.
- Check the retail value of wine.
- Avoid storing cases or bottles of wine on the floor in case the cellar floods.
3. Jewelry
- Clients should look for a policy that has pair coverage, that provides a grace period immediately after purchase in which the jewelry is still protected, protection for inflation, coverage for jewelry stored n bank vaults, and worldwide coverage.
- Store jewelry in a safe place and do not leave it out.
- Be alert while traveling and store jewelry in safety deposit box at the hotel.
- Ship the jewelry with great care and only as a last resort.
4. Collector Cars
- Clients should look for an insurance policy that has agreed value coverage, worldwide coverage, full transit coverage, that allows for repairs with original manufacturers? parts, and coverage for spare parts.
- Be sure that the client gets proper appraisals.
- Construct strong garages to store your car.
- Use proper transportation according to the needs of the car.
- Create an emergency plan in case of natural disasters.
See Katja Zigerlig, Protecting Aesthetic and Financial Instruments: Help Your Clients with High-Value Collections Embrace A Risk Management Approach, Journal of Financial Planning, 2011.
Special thanks to?Jim Hillhouse (WealthCounsel) for bringing this article to my attention.
December 2, 2011 in Estate Planning - Generally, Estate Tax | Permalink
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