A famous portrait of Marilyn Monroe painted in 1964 by Andy Warhol recently sold at auction for over $195 million, setting records for the most expensive piece of 20th century art ever sold and the highest amount paid for a piece of American artwork. The May 9 sale of the vibrant silkscreen, titled “Shot Sage Blue Marilyn,” also made history as the second most valuable public art purchase ever.
Proceeds from the auction will benefit children’s health and education charities, according to auction house Christie’s, which said the historic sale was a testament to the strength of the art market.
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On May 17, a Picasso painting portraying his lover as a sea creature sold at a Sotheby’s auction in New York for $67.5 million, CNN reported. These high-value art sales seem to be on the rise, said Sarah Chandonnet, Manager, Personal Insurance, Burns & Wilcox, Detroit/Farmington Hills, Michigan.
We are seeing all kinds of record-breaking sales right now and it shows that even as things change throughout the world, art is consistent among the experts and collectors out there.
“This is a time where collectors are really stepping into the space and making big splashes,” she said. “Whether it be art, collectibles, or luxury vehicles, they are purchasing now more than ever, and the need for a personal insurance policy to properly cover those items is apparent.”
Art market booming as collectors enjoy greater supply, access
The three major New York auction houses raised over $2 billion in art sales in May, the Guardian noted in a May 20 report, which attributed the booming art market in part to factors like an increase in the supply of sought-after works, a higher number of high-net-worth buyers, rising interest in tangible assets, and increased auction accessibility. One art dealer told The New York Times in a May 19 article that the art market was “stronger than ever” and said individuals look to invest in art when the stock market is down.
This is a time where collectors are really stepping into the space and making big splashes. Whether it be art, collectibles, or luxury vehicles, they are purchasing now more than ever, and the need for a personal insurance policy to properly cover those items is apparent.
A strong spring art market is also being anticipated in Canada, the National Post reported May 21.
“More individuals are collecting and purchasing, and I do not anticipate that trend slowing down,” Chandonnet said. “Records are being set almost daily. Everything is at their fingertips now, and it is easier than ever to purchase these luxury items.”
Another auction record was set earlier this month, when a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupé sold May 5 at a secretive auction for $142 million, making it the most expensive vehicle ever sold at auction, Forbes reported.
A Personal Articles Floater, also known as Personal Inland Marine Insurance, is a standalone insurance policy for high-value items that can cover breakage, theft, fire, mysterious disappearance, and other types of loss. “A Personal Articles Floater is going to offer you broader, more comprehensive terms and better pricing without gaps in coverage,” Mock explained.
This is a time where collectors are really stepping into the space and making big splashes. Whether it be art, collectibles, or luxury vehicles, they are purchasing now more than ever, and the need for a personal insurance policy to properly cover those items is apparent.
Even individuals with less valuable collections often need a Personal Articles Floater, since their Homeowners Insurance may only offer endorsements up to a limited value.
“Depending on the policy, it could be only $2,500. If you are purchasing a larger-value item, and it is important to you, you want to make sure it is protected on a standalone policy,” Chandonnet said. “Typically, if a client buys one piece of art, they are going to buy more. A Homeowners Insurance policy is extremely limited as far as fine art.”
The same principle applies to anyone in possession of potentially valuable items that have not been appraised. Earlier this month, a rare 18th-century Chinese vase sold at auction for $1.8 million; the seller had bought it decades prior and kept it in the kitchen, not realizing its value, CNN reported May 18. While some homeowners may believe their higher-value items are protected because they have a High-Value Homeowners Insurance policy, this is not always the case, Mock said.
“Even carriers that specialize in high net worth will limit coverage for valuable items such as fine art, jewelry and other collections,” she said. “For these items, collectors require specialty solutions and coverage.”
Consider coverage for new purchases, transit, market appreciation
When purchasing a Personal Articles Floater, it is important to ask about whether the policy will cover items in transit, especially given today’s supply chain and shipping difficulties, and to what extent market appreciation may be covered. In addition, some policies will automatically cover new acquisitions for 30 days, giving a buyer time to add the item to their policy.
“Whether you are adding to a collection or making your first $10,000 fine art purchase, you need to make sure that you have coverage secured,” Chandonnet said. “If you are an individual who purchases these luxury items, it is extremely important to have the correct policy in place.”
Some Personal Articles Floater policies are global, covering the item at any location, while others may be tied to one or more specific locations. “A lot of our clients have multiple locations or a secondary home and a primary residence, so that is going to be important to consider,” she said.
Those who plan to loan out a piece of art or collection to a museum will also need special consideration, Mock added. “The coverage we offer gives collectors peace of mind that their collections are protected while they are sharing them with the public,” she said. “If it is on display at home, you are in control, but elsewhere, there is a greater exposure to loss, sometimes due to greater foot traffic. It is very important to protect your investment.”
Collectors in higher-risk areas may face exclusions, risk mitigation requirements
Natural disasters are a threat to any homeowner and, in some parts of the U.S., the risk can make it more difficult to obtain a Personal Articles Floater. A recent Washington Post analysis found that 1 in 6 Americans live in areas with significant wildfire risk, and a previous report by the Post found that almost 1 in 3 Americans faced a weather disaster in the summer of 2021.
Depending on where they live, homeowners with high-value collections may have more exclusions on their Personal Articles Floater or could need to take on a higher deductible.
“In the event you live in California, which a lot of our clients do, we are going to want to know the plan for a wildfire,” Chandonnet said. “Do you have a company set up to help you with an evacuation? Are you aware of how to store the collectible items? Especially when very large paintings are involved, that is important.”
Collectors in more hurricane- or wildfire-prone areas could need to provide proof of the precautions they have taken, while owners of expensive jewelry collections could be asked to store certain items in a bolted safe or a bank vault. Security measures, such as having a central station alarm or being on a gated property, are key, she said.
Working with a broker who has that specific expertise can make or break a situation like that where they own a piece of historical artwork or something of great value.
There can also be problems finding coverage in certain areas with a high accumulation of value, such as the Upper East Side in New York, Mock said. “New York is a hub for artwork, and there are certain blocks where carriers may not offer coverage” because of the potential loss severity, she said.
A specialty insurance broker can help collectors address these challenges and select the right policy. They can also advise on the risk mitigation steps needed for their collections. “Working with a broker that has specific expertise is essential,” Mock said. “My advice is to work with somebody who has that expertise and can offer the proper direction. It is easy enough to go online and get your own insurance without a broker, but a lot of individuals doing that may miss the important details of the policy that need to be paid attention to. Working with a broker who has that specific expertise can make or break a situation like that where they own a piece of historical artwork or something of great value.”
As trends in high-value collections continue to evolve, the need for Personal Articles Floater policies is likely to grow, Chandonnet added. “The average collector today is going to be younger and want to acquire more, and that is what we are seeing,” she said. “If they want to protect their investments, which most clients do, they really should secure this policy.”
