Canadian brokers and insurance companies are still trying to shoehorn art insurance into separate disciplines such as “personal lines” and “commercial lines” insurance policies, which lags behind how art insurance is handled in international markets, according to a newly licensed Canadian art insurer.
“The large brokerage houses in the U.S. and Europe, they’ve recognized the specialist handling and knowledge required to handle art insurance,” said Ann-Louise Seago, chief agent and managing director of the newly established Canadian branch of AXA Art Insurance Corporation. “They have set up their own fine art departments and they employ a combination of art and insurance experience to handle simply insurance of loss or damage to the objects.
“With that [specialized] department, they deal with art insurance whether it’s commercial or personal lines in the traditional sense. They deal with all enquiries for standalone art coverage. Now in Canada, that isn’t the case.”
Traditionally in Canada, insurance brokers and insurers have insured art within one of two ways, Seago told Insurance Business.
First, brokers and insurers may try to insure private individuals’ art collections through homeowner policy extensions known as ‘riders.’
Second, commercially-owned collections – art owned by law firms and banks, for example – are often covered in Canada under a commercial lines policy. Such policies may contain sublimits for art.
“That’s not what we would consider is the best way to go about insuring art, but that’s how it’s traditionally done in Canada,” said Seago. “We do standalone or monoline policies. We are trying to spread the word to brokers to appreciate the significance and differences of art and to try and do something about setting up a specialist unit within their brokerage houses.”
Seago listed a number of differences between monoline or standalone art insurance policies, as opposed to handling art insurance through one of the two different disciplines of “personal” and “commercial” lines policies. Among them:
Monoline policies typically have more expansive definitions of “art,” eliminating loopholes that might leave art uncovered. For example, a standalone policy might define art as “objects of art of every nature and description.” Such a broad definition would include auctioned items such as stamp collections, antique maps or furniture, etc.
In contrast, homeowner and commercial policies may have stricter definitions of “art.” For example, the policies may list specific items such as “glass,” “ceramics” or “prints.” Objects not appearing on the list would thus remain uncovered.
Standalone art policies may have a variety of loss settlement options – for example, an agreed value, current value of the art with a cap of up to 150%, or the current value of the art without a cap, which would take into account the increased value of the collection over time.
Other differences may include:
• Monoline or standalone art coverage can offer all-perils coverage, whereas personal lines or commercial lines policies might contain exclusions for damage caused by certain perils – earthquakes, say, or water damage.
• Monoline coverage is more forgiving of art collections that move or travel, providing “hook-to-hook” coverage of collections that move internationally from one institution or collector to another. Some standlone coverages do not require art objects to be tracked as they move, as might be found in the personal lines-commercial lines approach to art coverage.
• Finally, standalone policies can be backed are backed by higher capacity limits. A specialist art policy, for example, could offer up to $350 million of coverage for a single collection in Canada, for example, whereas some personal lines or commercial lines insurers might wish to hold the line when art items reach limits of $500,000 or $1 million.