It is important to have an up-to-date valuation of your artwork to ensure provide you full coverage in the event of a claim. Factors such as artist, market value, and date become important when art is valued for art insurance. Ways in which different categories of art are valued for Art insurance:
- Insured own artwork: Insured own property or artwork is valued based on the value agreed in the Art Insurance policy.
- Sold item not delivered: Selling price less the fee/commission
- Purchased item: Cost price plus the fee/commission
- Property in Care Custody and Control: Market value/ liability, whichever is less
In the case of valuing the art of established artists, help comes from their large amount of documented sales, both from auctions or personal art galleries.
In the case where the completed artwork face damage/stolen before selling it officially, one can value it at its selling price. Your insurance will fetch you a sale price less than the predetermined percentage.
Generally insured the sold artwork for the full sale price. is determined by The percentage of the work completed determines the valuation of work-in-progress artwork. When stealing or destroying artwork on a particular date. Fair market value always plays a major role.
In the case of a less established or young artist, valuation becomes more complicated. Fewer documented sales become the major setback point. In such instances, more depth research and support factors help in final valuations. Relying only on recently sold artwork does not help.
Case 1 on Art valuation for an Art Gallery
Regal Art Gallery in Mumbai was famous for its art exhibitions. Known for the large crowd that gathers for each auction. This gallery had insured itself with the help of a general liability insurance policy provided by an insurance company. Covering the gallery against:
- Premises liability – It covers any accidents happening inside the art gallery or on its premises.
- Product liability – It covered the products that the gallery sold.
- Completed Operations
A budding artist showcased his debut exhibition in this gallery. However, the artist claimed that the gallery did not promote the opening enough and thus he suffered financial losses and damages. He filed a legal claim against the art gallery.
The completed operations section of the general liability policy helped in protecting the art gallery.
A few days after, someone stole some paintings from the art gallery. The well-known Regal Art Gallery often carried out auctions of its paintings, it documented all the auction-related documents. The Art Insurance policy valued the stolen paintings based on the value agreed upon in the policy.
Case Art Valuation for an Individual Artist
Living in Delhi, Soham at 27 years of age was a budding artist of his generation. He had maintained his studio in a building where he regularly displayed his painting. Earlier he had sold some smaller paintings. Now he was working on a bigger picture by making large paintings that he had never painted or sold before.
He was looking forward to selling these paintings at a handsome price. But life had some other plans for him, and one day, when he was out shopping, the fire in his studio destroyed all 6 of his paintings.
Soham now claims that each of his large paintings was worth rupees 25, 000. So how will the insurance company value the correct price of his paintings?
The destroyed paintings must be worth 25,000 each to Soham, but this does not mean that they are worth the same in the open market. Before destroying the paintings Soham did not have any adequate proof of the fair market value of the paintings.
Soham would have been right at valuing the painting at 25000 each if:
- He sold a similar painting at the same price before destroying it.
- If Soham or an Appraiser demonstrates that comparable paintings regularly sell for comparable amounts in galleries or through agents or representatives.
In Soham’s case, the appraiser would value his paintings by taking into consideration the facts about the art market and the artist (Soham).
If for example, comparable art by similar artists sells at the local art market for between 10,000 to 15,000 rupees per painting, then may use these values in order to value the destroyed art.
Consider another case where Soham’s paintings were merely damaged. But not totally destroyed by the fire. Here the art could restore to its pre-condition by proper cleaning as it was only smoke damage. Here the value of the art or the damage claim equals the value of restoration.
