It is finally March in Hong Kong!
That means that Art Month is here again, and a wealth of interesting events are being held across town showcasing the latest and greatest in the art world.
With the huge number of art shows being held around town it makes sense that this is the busiest month of the year for Art Dealers locally. But before you snag the amazing piece you’ve just seen it may be worthwhile considering how you are going to protect your investment.
With a large number of uninsured art collections in Hong Kong collectors are at risk of fire, theft, and even accidental damage. So when you’re looking at the next piece to add to your collection at one of the many art events this month, here are some things to consider.
Insuring Art with a Home Insurance Policy
One of the most versatile products in the Hong Kong insurance market is the Home Insurance policy – and there are a number of exceptional options available for protecting your residential possessions, including smaller art collections.
Individual items worth less than HK$100,000 can normally be covered automatically under a Home Insurance policy. Any pieces of art you purchase from an event like the Affordable Art Fair would normally fall into this category.
As long as you have a home insurance policy in place, new additions to your collection worth less than HK$ 100,000 will automatically be covered under your existing insurance policy as soon as you get them home! This makes life simple, and means that you don’t have to worry about paying any additional fees or notifying the insurer of the addition to your personal art collection.
With this automatic coverage in the event of a loss situation the insurer will typically cover a replacement or restoration of the item, whichever is the least expensive option, up to the HK$100,000 limit. You would normally need to provide proof of value, however, in a claims situation so make sure to retain your purchase receipts!
Specified Items on a Home Insurance Policy
Depending on your attachment to a particular piece, your relocation plans in the future, or the value to the specific item, it may be worthwhile specifying a new piece of art under your home insurance plan.
Specified items normally start at a HK$100,000 valuation with many insurance companies limiting the amount of coverage available to a single specified item to HK$200,000, but it some cases it may be possible to specify an item for coverage that falls outside of that range.
In the event of a total loss (such as irreparable damage or theft) of items which have been specified on the policy you would be reimbursed for the full value of the piece.
By specifying an item for coverage under a home insurance policy you will also receive a “Worldwide All Risks” benefit against any claim you may make for a specific piece of art – giving you the widest range of protection possible against all situations which may result in loss or damage to the item in question.
At an event like the Asia Contemporary Art Show where pieces can be valued in excess of HK$100,000 it could be beneficial to consider specifying your new purchase on your home insurance plan to ensure that you aren’t running a big financial risk in the event that something happens to the piece.
When specifying a piece of art under your home insurance policy you will need to provide proof of value at the same time as you are adding the item to the plan; either through the original receipt or through a formal valuation – the coverage will then be limited to this value. Consequently it can be a good idea to have your specified art items reappraised every few years, especially if you think the value has increased.
Standalone Art Insurance Plans
While a typical home insurance plan may suffice for most people, serious collectors with collections in excess of HK$200,000 will likely have a range of concerns outside of simple loss events; issues like provenance, defective titles, and reclamation from original owners can all be real risks for older and more valuable pieces (depending on how and when they were acquired).
Additionally, a limit of HK$200,000 may not be suitable for items purchased at Art Basel or a Sotheby’s auction – meaning that most home insurance products simply wouldn’t work.
For the serious collector with extensive and valuable collections, a standalone art insurance plan is often the best (and only) option.
Items are insured on an annual “agreed value” basis, meaning that the insured and the insurance company will agree a specific and realistic value for the collection each policy year – and each piece in the collection will have its own declared value for which it will be covered in the event of a loss event. It is important to note that the higher the value of the individual pieces in the collection the more expensive the policy premium will be; but in the case of a stand alone specialist art insurance policy you do get what you pay for.
Collections in Multiple Locations Under a Single Policy
One unique aspect of the Hong Kong art market is that collectors here will often have residences across the world, and will choose to house their collection across those residences. In certain locations, such as a holiday home in Thailand, insuring your collection locally can run the risk of theft – this is due to the fact that you will likely be declaring your items at which point it is known locally that you have a valuable collection in a residence which may not be occupied year round.
A number of Hong Kong insurers are offering the ability to cover collections in multiple residences globally as long as the policyholder is resident in Hong Kong and has covered their locally based collection as a starting point under the policy. This gives you a large degree of flexibility, and will even insure you against the risks involved in moving your artworks to your other homes around the world, which can be invaluable especially if you plan to repatriate back to your home country.
Art and Collections Insurance in Hong Kong
So there you have it, just some of the many aspects involved in art insurance in Hong Kong. While it may not be an absolute necessity to insure your collection, it is worthwhile thinking about when you’re at one of the many exciting art events in Hong Kong this month – especially if you have your eye on that amazing Edgar Degas ballerina sketch!
For more information Hong Kong art insurance or to learn how you can better protect your collection, contact CCW Global for a personalized quotation today!