From paintings and photographs to sculptures and other installations, artwork can hold significant emotional, cultural, historical, and financial value.
Art appraisals are crucial for determining the true worth of a piece. They provide accurate estimates of an artwork’s financial value, considering its historical and cultural significance. These appraisals can guide decisions on buying and selling art and assist with tax calculations. Additionally, art appraisals play a vital role in influencing home insurance policies for art owners.
How art appraisals affect insurance for artwork
The typical home insurance policy may include art collection coverage. However, insurers often recommend obtaining an insurance rider when the artwork is suspected to be worth more than the coverage limit. This helps ensure that a homeowner’s art collection has sufficient protection should an insurance claim be necessary. Obtaining a rider will require the completion of a professional art appraisal.
An art appraisal accurately estimates the art’s financial value, including its restoration cost. Accurately assessing a collection’s monetary value is a significant component of ensuring adequate insurance coverage. For instance, an art collection with an estimated retail replacement value of $100,000 requires at least that much insurance coverage to ensure the pieces can be fully restored or replaced. If you don’t have sufficient coverage, you may need to pay the difference out of your own pocket.
Understanding the art appraisal process
The first step in completing an art appraisal for insurance is to select an accredited art appraiser. Sometimes, your art collection may merit an appraiser with specific knowledge of your art, such as someone with deep expertise in sculptures for a sculpture collection.
Once you have selected an accredited art appraiser, you must follow several steps to complete an art appraisal for insurance.
Artwork examination
The appraiser must physically examine the artwork to assess its authenticity and note specific identifiers accurately. They will also discuss its condition. In some instances, damage may mean the piece isn’t insurable, but in others, wear and tear (sometimes referred to as patina) can increase the piece’s value. They will also examine the artwork’s history, including previous appraisals, exhibition records, and sales and purchase receipts.
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Market research
The appraiser will compare the piece to similar artworks, analyse current trends in the market, and weigh similar data to determine the artwork’s position in the overall market accurately.
Final report
The appraiser will gather the necessary data into a final report for the insurer. The report must contain the owner’s name, appraisal date, and descriptions of all artworks examined, including identifiable features, any damage, and photographs. It must also contain the estimated replacement value, including taxes. The appraisal report is crucial to determining the appropriate insurance coverage for your art collection.
The value of art and how often to get an appraisal
The value of art, both in terms of replacement and market value, can fluctuate over time. The condition of an art piece is the most apparent contributing factor to this. The demand for a particular style, such as impressionism, art nouveau, or realism, can also affect the value of an art piece. You can see a similar effect on value in the changing demand for a specific art form, such as paintings, photographs, or sculptures.
In addition, the passing of the artist can also increase the value of their art, at least if the artist is well-known. One of the most famous examples of this is Vincent Van Gogh, whose art was not worth much during his lifetime but, as everyone knows, has skyrocketed in value since his passing.
Art can fluctuate in value over time, so we typically recommend conducting a professional art appraisal approximately every five years. This helps keep the value of your art pieces updated and ensures your collection has the most appropriate coverage for your unique needs and risk tolerance.
Selecting an appraiser for your art collection
Several elements must be considered when selecting an appraiser to analyse your art collection. First, it is best practice to engage the services of an accredited art appraiser to ensure they have received sufficient training and are following a set standard for their appraisal process and final reports with necessary details for insurers. The Canadian Personal Property Appraisers Group (CPPAG) is a good resource for beginning your research into what accredited appraiser may be most appropriate to evaluate your art collection for insurance purposes.
Next steps
Be sure that each piece in your art collection is protected from financial losses by talking to an experienced insurance broker like Cowan Private Client. Our wealth of knowledge and experience allows us to build the insurance solutions that best matches your unique needs and risk tolerance, protecting what makes your life remarkable.
Contact Cowan Private Client today for personalised recommendations on insuring your art collection.
