Between the 1960s and the 1980s, a total of25 private collections were open to the public as museums. Butas the number of collectors has increased and the value of the fineart market has skyrocketed over the past four decades, so too hasthe number of private galleries. In fact, 70 percent of all private museums in the world have openedsince 2000.

As high-net-worth collectors increasingly buildprivate museums — whether for the desire to share their collectionswith the public, preserve a legacy or possibly receive tax benefits— many overlook costly property & casualty insurance risks.

If not addressed, these risks could negate some of theassociated financial benefits and lead to significant out-of-pocketcosts for clients.

Fortunately, there are a number of best practices and riskmanagement strategies agents and brokers can leverage to helpprotect clients and their valuables. Here are three to get youstarted.

Start with the basics

More than one-third of private museums have more than 20,000 visitors peryear. Coupled with the fact that the IRS may require a privatemuseum be open to the public, agents and brokers need to speak withtheir gallery-owning clients to ensure that proper safety measuresare in place to protect their artwork, guests and wallet.

Clients should consider hiring administrative and securitystaff. In the course of their responsibilities, it's likely thesesame individuals will come in regular contact with your client'spriceless works of art. Before hiring museum staff, agents andbrokers should advise clients to conduct thorough background checkson all potential employees, ideally going beyond the routineevaluation. Advising your client to spend a few extra minutes onthe background verification process can provide them with greaterlong-term peace-of-mind that their valuable articles are in safehands.

Look beyond aesthetics

Deciding what to display in a private art gallery can bea difficult process, and many clients would be well served byworking with a professional curator. But choosing where to displaya piece or a series of works is about more than aesthetics. Rather,agents and brokers should educate clients that there are a host ofpotential damage sources hiding above, below and even behind apiece that could be a source of concern.

For example, water leaks are a common, unforeseen risk for aclient's private art museum. Again, an insurer's risk consultantteam can help your customers protect their property and contents,including their valuable artwork, from costly water losses. Forexample, to safeguard against potential damage, risk consultantswould recommend that clients install an active,central-station-monitored water detection system that is based onthe water flow rate within the building, ensuring that it featuresan automatic shut-off valve for the main water supply. Further,water leak sensors should be installed in key areas of the gallery,including the lowest part of the basement and adjacent to any sumppumps or water heaters.

Guard against fire

Additionally, clients should use a similar central stationmonitored system to guard against fire exposure. This system shouldfeature a combination of low voltage and wireless smoke detectorson all floors and areas where artwork is displayed. If a firesprinkler system is installed, clients should, as much as possible,display artwork out of the direct range of sprinkler heads tominimize water damage in the event the system is activated.

Art is meant to be shared and private art museums allowhigh-net-worth clients the ability to open their valuablecollections to the public. Taking the time to sit down with clientsto discuss how to best protect their private gallery can helpensure their collections will be enjoyed for generations tocome.

Laura Doyle is a fine art specialist for Chubb Personal RiskServices. Connect with her on LinkedIn.