Art is back; is yours insured?

French May, Art Basel, Art Central, the K11 Art Mall; after what seems a very long time, some familiar names have finally returned to Hong Kong this month, much to the delight of art lovers and collectors across the city.

From physical art to concerts and showcases a limited degree of normality is appearing; especially when it comes to our event calendar. However, if the last 24 months have taught us anything its that the unexpected can, and will happen. From covid to social unrest, the risks posed by the last 2 years have been wide and varied.

So, with this in mind and on the fact that it has been some time since we last looked at specialist insurance protection, lets talk about Art Insurance in Hong Kong.

What is Art Insurance?

Art insurance is a catchall term for a number of different product classes. In fact, Art Insurance could be as simple as a Home Contents Insurance policy, depending on the value of your collection. In other cases, Art Insurance may mean a bespoke policy created to cover the risks associated with a specific collection – whether that be comic books, cigars, or even classic cars.

It is important to understand that there will be differences between the art insurance products available in Hong Kong. A home contents insurance policy, for example, would likely not cover the requisite risks associated with a high value painting collection, but the same policy would likely satisfy the requirements of the owner of a single modestly valuable painting.

So, if we’re not looking at a Home Contents policy, what should you expect to find in a dedicated art insurance plan?

Artwork Loss and Damage Insurance

The most obvious and straight forward protection offered under Art Insurance in Hong Kong is that associated with the risk of loss or damage of the works being insured while inside your home.

Whether this loss is caused by accidental damage (maybe a curious toddler decided to pull the frame), or theft, the insurance will generally provide two claims scenarios; restoration of the damage, or financial compensation for the value of the work. Whether you are able to have the artwork restored is based entirely on the insurer’s discretion and depends on the extent of the damage to the work.

Under some Hong Kong Art insurance policies it is also possible to insure art that is temporarily located outside of your home, or is located in another one of your residences elsewhere in the world. This flexibility is offered on the understanding that high level collectors may elect to donate their works to museums or galleries for temporary display to the public.

By including the ability to have your Artworks insured outside your home on the same basis as the works inside your household, art insurance policies can offer a great degree of flexibility – especially to owners with larger collections that may be internationally mobile.

Defective Title Insurance

A concern in the art world, especially with higher value works or rare collections is the issue of running into a defective title. While title insurance is required in property transactions, it is often (surprisingly) overlooked in the high value art market.

A defective title could allow someone else to claim your art asset after you have paid for it; if they are able to prove that they are the legitimate owner, then under law they may be able to seize your artwork without repercussions. In this case you would have lost the purchasing costs of the work, and the work itself, even though you have done nothing wrong.

Defective title issues crop up in relation to stolen art and forgeries, or when there is a provenance gap with a particular work that is hard to explain.

Art Title Insurance covers you against the purchase price for any works you are legally required to give up, and many policies also cover you against encumbrances or liens on the work of which you were unaware prior to purchasing.

Death of Artist Insurance

If the artist of a work you have purchased dies, then it is likely that the work will increase in value. This can lead to a situation where the art you own is actually underinsured and means that you would not receive the appropriate value in a claims situation.

Most artists, historically, have not been successful in their own lifetimes. A perfect example of this is Vincent Van Gough.

In the event that you experience a loss or damage to a piece of art you are currently insuring, and your policy includes Death of Artist protection, then the insurance will cover 100% of the increase in the value of the art. Valuations and receipts supporting the increased value of the art must be provided to the insurer before the owner is able to receive the increased claim amount.

Insuring New Additions to the Collection

While art insurance is generally an annual contract, being renewed on the same date every year, art purchases are organic – not contained to a specific date or time. A collector wants to ensure that their collection is protected, no matter when or how they add to it.

As such, Art Insurance will normally allow you up to 60 days from purchase to notify the insurer and add the newly acquired works to your policy. Within this 60-day grace period the art is treated as pre-existing on the policy and subject to the normal policy terms and conditions.

This gives owners the flexibility they need to add to their collections without worrying about immediately obtaining comprehensive insurance for their new acquisitions.

Art Insurance Offers Comprehensive Protection

Art insurance in Hong Kong offers comprehensive coverage against a wide range of risks on all of your artworks, or any of the items in your prized collection. Many people get stuck on the idea of art insurance being only, and strictly, for “artworks.”

At CCW Global we have insured everything from Magic the Gathering Cards to Vintage Classic Cars. Art insurance is designed to protect your rare and valuable assets and collections – whether this is a collection of Patek Philippe watches, Cartier jewelry, or actually a number of paintings, makes no difference. The art insurance umbrella is designed for almost every type of collection imaginable.

With the Hong Kong art scene emerging like a sprouting flower in the spring rains after the long cold Covid-19 winter of the past 12 months, experts are predicting a surge in activity in the local art market this year as buyers engage with the many events kicking off this month. With the depression in art activities locally, and the postponement of events including the Contemporary Art Fair and the Affordable Art Fair, opportunities for finding new spark and joy have been limited.

The return of Art Basel and the French May to Hong Kong this month bring a much-needed taste of culture to what has otherwise been a fairly stagnant year, from an arts perspective.

CCW Global is able to provide comprehensive and bespoke coverage for collectors and art lovers in Hong Kong and elsewhere around the world. Our expert Hong Kong Insurance brokers are able to work with you to provide no-cost, no-obligation quotes that compare the best possible insurance solutions for your collection.