Art insurance secures the most precious work created by an artist against financial damage. The coverage is applicable for all of the insured perils or risks.
The following risks are not covered in art insurance:
- Art insurance does not cover loss to the insured article due to the aging of its intrinsic material.
- Loss to insured art resulting from third-party vandalism or trespassing, unless it happens even after taking the required security measures.
- Loss to insured art due to sudden temperature change, unless it is due to an insured natural peril like a storm, tempest or snowing.
- Loss to insured art that is below the pre-agreed deductible amount in the Art insurance policy.
- Loss during the process of making changes or improvements in the art.
Case on Art Insurance Coverage
Let us assume that Daniel is a private collector of valuable Art. Insured art is a statue built by a Korean artist.
Loss to art due to intentional recklessness and aging of the material: After insuring the art, Daniel is careless about maintaining it in a safe and secure place. He keeps the statue in his garage. The statue slowly gets worms on it and it begins to lose its original beauty.
Loss Avoidable by adequate security measures: Daniel has maintained the insured piece of art in the store room of his house. The store room has an entry door from the backyard of the house. Sometimes, this door is kept unlocked. Some neighbourhood children seek in the room and touch the art with their muddy hands and the painting gets damaged.
Loss due to change in atmosphere without interference of natural peril such as storm or tempest: Daniel has kept his insured piece of art in the office. He forgets to switch off his office air-conditioning before leaving the office at night. The room gets colder, creating enough humidity to develop stains on the insured painting.
Claim will not be paid until insured’s liability that is the agreed deductible amount mentioned in the policy is exhausted: Daniel has insured his piece of art for INR 5 crores with a deductible of INR 50 lakhs. The insured statue suffers damages worth INR 10 lakhs due to electric fire which is covered under the Art insurance policy. Daniel makes the claim but it gets rejected because the amount of loss is below the deductible amount. Amount of loss: INR 10 lakhs < Deductible amount: INR 50 lakhs.
Loss occurred during repair work is unpayable: Daniel gives permission to the Korean artist to revamp his statue, in a bad mood. The artist ends up breaking it by accidentally hitting the hammer on the most delicate part of the statue body.
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