Art Insurance

Insurance and Liability in the art world

Fred Weijgertse, Managing Director of the world’s first integrated international fine art logistics company, Crown Fine Art, talks to Private Art Investor about why liability and insurance is a growing issue in the Fred Weijgertse_editedtransportation of fine art.

How does liability and insurance risk tie into what Crown Fine Art are doing?

We work with Museums and Art Galleries to ensure the safe storage and transportation of art around the world.

In order to avoid risks, our clients need to know the condition of paintings and artefacts, they need the right insurance and they need to know what the agreement is with transport partners and who is responsible for what.

Why is liability and insurance so important when transporting art?

Previously, liability and insurance during the transportation of art and artefacts has largely been overlooked – the attitude in the art world has simply been that everything would be ok. However, in the modern age, with a bigger emphasis on litigation, a greater understanding of conservation and ever-changing rules at customs, being clear about liability is increasingly important. It has become more vital than ever that clients understand risks in order to make sure their paintings are protected.

Why has it been overlooked until now?

I think it’s partly because thankfully clients have experienced very few problems over the years. However, we would always advise clients to have insurance and to talk about how paintings are protected, particularly within the increasingly litigious environment we are working in.

What are the changes to Russian legislation? How will this impact on the transportation of fine art coming in and out of Russia to other parts of the world.

There are big changes ahead at customs with the authorities warning paintings will require a guarantee in future to get into the country.

The date for this change keeps moving – it was meant to be last July, then September, then January and it has very recently been postponed again. But the reality is it will come in eventually.

It will have a big impact. If you are moving a painting worth £10m then someone may need to put down a 15% guarantee fee. So it’s a big issue and can make it more difficult for exchanges of art between Russia and other parts of the world.

The reasons for the change are complicated. There is a political element because there are of course some economic boycotts of Russia at the moment and that creates a complicated environment, this could be a reaction. But also there have been many incidents, not in the fine art market but in others, of people bringing lorry-loads of goods into Russia and leaving the country empty with nobody having paid any duty. This new rule is a way of getting grip on the situation.

How does guaranteeing art during transportation work?

Anyone bringing artwork into the country, including private art investors, are required to provide a fee. For most countries there is a possibility of using the TIR-Carnet if temporarily importing artwork for an exhibition.

In Russia, the latest update states that a TIR Carnet can be used with any value of the shipment, but if the value of the goods in the truck will be over 333,333 Euros, TIR Carnet covers 60,000 Euros of customs duties and taxes, a customs escort should be booked from the border to the destination customs point; this is obligatory according to Russian customs legislation. However, to use the TIR-Carnet in Russia, when the legislation does change, customers will have to pay a guarantee of 15% of the value under the new regulation.

Is it becoming more important to insure or guarantee art for transportation?

Yes it is, for a number of reasons. Art is worth more than it used to be and, with improved transport, the world feels like a smaller place which means that art is moved more often.

We pride ourselves on moving art safely but theft, weather damage and accidental damage can happen and it is important to protect your artwork.

What are Crown Fine Art doing to battle against these issues?

We are communicating effectively with our clients and ensuring they remain focussed on due diligence and informed of the legislative changes taking place in markets such as Russia.

Our global network of offices helps us to remain up to date on these issues.

How important is condition reporting? How do you ensure this is done to a high level and efficiently?

Condition reports, completed before and after works of art are transported, are vital to assess the condition of the art work and to ensure it is protected. In the past these reports have always been done on paper. Perhaps 20 years ago it might have just been two sheets, now 20 pages is the norm and so things have to change.

Crown Fine Art in the Netherlands is currently trialling digital condition reporting – another example of how things are changing in relation to insurance and liability.

How much of Crown Fine Art’s work is with Russia? How much is affected by the new legislation?

Russia is one of the biggest regions for Crown Fine Art. There is a big Calder exhibition coming in from the USA to the Pushkin State Museum in Moscow at the moment, for instance, and we have also been moving an exhibition out of Moscow to Italy.

How do Crown Fine Art insure art that they transport? Which insurers do you work with? How do they manage the risk?

Our role is not to insure the art ourselves but to encourage our clients to do so wherever possible. The artworks which are borrowed by museums are never insured by Crown Fine Art. Sometimes we act as a broker between insurance company and the final consignee but this is only for gallery and auction house transportations.

In the UK the most important scheme we adhere to is the UK Government Indemnity Scheme (UKGIS), which is crucial to our industry. Without it the practice of museums ‘loaning’ items to other museums both in the UK and around the world would be almost impossible due to the huge cost of commercial insurance. Many museums around the globe are also using the state indemnity scheme, giving them the opportunity to organise big exhibitions.

For private art investors we would always recommend taking out an insurance policy. Those bringing artworks into a country for their own collection will need to pay import duties, but those bringing in artworks for loaning will classify as a temporary import and no duties need to be paid. Restrictions differ between countries regarding the maximum temporary import, for example in the Netherlands it is one year.

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Rebecca Hawkins

Rebecca Hawkins

Rebecca's passion for the visual arts started at a early age so studying a BA (Hons) in History & Philosophy of Art was a natural progression. A keen artist she has also completed a Fine Art Foundation to develop her own artistic practice. Rebecca has recently started writing features for Private Art Investor. Please feel free to contact Rebecca on +44 1737 245 564 or at rebecca@privateartinvestor.com if you are interested in arranging an interview.