Art Insurance 101: The Full Picture

Art is a timeless treasure that carries cultural importance as well as a hefty price tag. Every art galleries and owners should be aware of just how valuable and at-risk their pieces are. Theft is one of the most significant risks art galleries and museums face. According to Interpol, more than 50,000 pieces of artwork are stolen each year worldwide. Hence, it is more important now than ever.

What’s more, natural disasters can impact art gallery investments, too. In October of 2012, Hurricane Sandy took a toll on the New York City neighborhood of Chelsea, an important art district along the Hudson River. Many art galleries subsequently suffered extensive damage to their artworks, equipment, and building. One owner suspected the damage to be in the hundreds of thousands. When disaster strikes, art insurance will cover your gallery, art collection, and everything within your gallery perimeter.

Policies To Consider for Art Insurance

Business Owners Policy (BOP) for Art Galleries

A Business Owners Policy is a comprehensive package of the following policies:

Commercial Property Insurance: Commercial property covers business property as well as equipment breakdowns.

General Liability Insurance: It provides coverage for personal as well as third-party bodily injury and property damage.

Business Interruption Insurance: It includes lost business income due to damage to business property.

From art connoisseurs to handymen, an art gallery has many visitors, increasing risks of theft or vandalism. Your gallery will need a BOP to cover such risks and liabilities at an affordable rate.

Workers Compensation Insurance for Art Gallery

Workers compensation insurance covers employees who suffer from injuries or accidents that occur on the job. This insurance compensates employees for lost income and also takes care of their treatment costs.

Working at an art gallery involves getting creative and utilizing spaces for exhibitions. From painting the gallery to setting up sculptures and installations, employees are vulnerable to risks and dangers. Workers compensation insurance is mandatory in all states except Texas.

Commercial Auto Insurance

Commercial auto insurance covers third-party claims of bodily injury or property damage in case of an accident involving a company vehicle. If your business uses company vehicles to transport artwork, this insurance is a must-have. It mandatory in all states (except New Hampshire and Virginia) for businesses that have commercial vehicles.

Commercial Property Insurance for Art Galleries

Commercial property insurance covers business-owned properties from perils such as vandalism, fire, explosion, and smoke damage. The artwork in your gallery is covered under this policy if they suffer damage due to named perils. Additionally, art insurance can also help you restore your gallery after suffering from extensive property damage. This includes furniture, lighting, flooring, etc.

Commercial General Liability Insurance (CGLI)

A CGLI policy covers third-party damages that occur within the premises and claims that take place owing to business operations. The policy provides coverage for:

• Bodily injury
• Property damage
• Personal and advertising injury
• Medical payments
• Defense against legal actions

It also includes coverage for another artist’s artwork that is being showcased at your gallery. For instance, in the event of a fire, the policy can cover the cost of replacements, compensation, or restoration of damaged artwork. As per Art Business News, one painting conservator claimed that the average cost to restore a small painting can vary from $800 to $1,000, while the restoration of larger artworks can cost anywhere from $10,000 to $15,000.

CGLI excludes claims resulting from professional errors and negligence. In such cases, it is important to have professional liability insurance which includes E&O insurance, and D&O insurance.

Employment Practices Liability Insurance

Employment practices liability insurance (EPLI) covers employee claims against the business for illegal practices. It secures claims such as discrimination, sexual harassment, and unjust termination.

Commercial Cyber Liability Insurance

Commercial cyber liability insurance will protect your business from losses caused by cyberattacks. The policy covers vulnerabilities, losses, and damages caused by data breaches and malicious hacking.

Cybercrime is one of the fastest-growing offenses. In a report by Cyber Security Ventures, it is estimated that the annual cost of global cybercrime damages will be $10.5 trillion by 2025. Art insurance is important to safeguard your business’ data to protect the private information of your employees, customers, and vendors. If hackers are able to bypass your security systems, cyber liability insurance will have you covered.

Inland Marine Insurance

Inland marine insurance is a property insurance policy that covers property in transit via land. Damages during transit are responsible for many of the art insurance claims. Inland marine insurance can help protect art while it’s on the road. However, a comprehensive commercial cargo policy insures all types of transit: land, air, and sea.

Business Interruption Insurance (BII)

BII covers the loss of income and operating expenses when a business shuts down due to disasters like theft, fire, storm, or vandalism. You can’t afford to have your gallery close and lose potential business. When a disaster forces you to temporarily close your gallery, BII will cover the loss of income.

How Much Does Art Insurance Cost?

Insurance companies consider a few aspects that may affect the cost of your art insurance, such as:

• Location of the gallery
• Size of the collection
• Security
• Type of artwork
• Sales

Buying art insurance is extremely important if you own art. But how do you know that your insurance has all the aspects covered? The answer is to get in touch with experts. Find an agent today!

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