Most Fine Arts Losses From H20, Fire

Greg Smith, director, Cunningham and Lindsey in New York, said more loss is due to damage than theft. "But it's sexier to talk about theft. It's not that interesting to see a forklift go through a painting, but it's interesting to read about Rene Russo on the Thomas Crown Affair."

Mr. Smith said theft of fine art often occurs while work is in transit to and from galleries and museums, but the biggest issue to an underwriter is water.

With organizations such as churches, which have little money for repairs, "your biggest issue is going to be neglect of the building, which could create a loss," he noted.

Mr. Smith explained that underwriters need to know what warehouses are being used for storage of fine arts and how the items are packed.

"Do you know the warehouse? Do you know what kind of alarm they are using? Is it climate controlled? What type of access do they give? And do you know what type of storage?" he asked. The panel recommended that storage facilities be checked if possible.

Dorit Straus, vice president, worldwide specialty fine art manager, with the Chubb Group of Insurance Companies in New York, said that most of the theft you hear about or read about involving museums today is not in the United States, and that if there is a theft, it is more often a robbery of a dealer or a personal residence.

"I'm not saying there's no museum theft, but it's not because the alarm didn't work. It's more because of other issues. And theft is not the primary cause of museum losses," she said.

One of the largest exposures, the panel agreed, is shipping. Other exposures include fire and water damage. Along with water damage, mold has become an issue, particularly with works of art on paper, she said.

Ms. Straus said she received an education when she decided to accompany an inspector looking at the storage facility of a client, a fine arts dealer. The client's storage area was a converted bathroom with "styrofoam all around the bathtub," she said. To make things worse, located directly above the storage area, she learned, were a bathroom and spa.

In another instance, she said, she learned that valuable artwork was being stored directly on the floor of a facility leaving it vulnerable to damage or ruin in case of flooding. Typical places for storage are basements and attics, she said.

Mr. Smith said that fine art has been a good product to write, but that jewelry, also a part of inland marine, is "a tough sector." He noted that claims that are being incurred include salesmans' losses "where they are carrying $500,000 walking down the street and they get robbed."

As jewelry salespeople walk from store to store, they are often followed by someone intending to rob them, he said. The robber waits "until they do something stupid, like go to the bathroom without the bag."

This type of robbery is occurring all over the country Houston, Atlanta, Arizona and Denver all have problems, he noted. This is especially an issue during the Christmas holiday season when salespeople are trying to make their deliveries.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.