Art needs to insured separately from ordinary contents. Only those things that can be replaced with reasonable ease can be insured with ordinary replacement value insurance. Art is not replaceable with reasonable ease. Art is unique and original.
Ordinary home insurance or commercial building insurance is not designed to cover art and special items. Art, jewelry, antiques and other valuable and unique items need to be insured with fine art insurance.
Fine art insurance is known professionally as Inland Marine insurance. This is a very old term. Inland Marine insurance has developed over centuries with its own rules and limits. It has become the standard insurance for art, antiques, jewelry, antiquities and rare items that are not replaceable.
Art is normally insured based on a recent appraisal. The appraisal must be done by a qualified person. The owner can insure the item at the appraised value or a lower value… but not a higher value.
The insurance company and the owner “agree” on a value. Agreed value is a legal and binding term. The insurer will pay up to the agreed value if the item is lost or damaged. The insurer will not pay more than the agreed value even if the market value has increased.
The agreed value of the art or antique item is the basis of the insurance premium charge. The basic rule of thumb is $1.00 charge per $100 of value. The actual rates can vary based on circumstances such as security and location.
Some items that are extremely valuable but not protected could be uninsurable. A gold chalice left out on an alter in a church that is not locked would be an example of an item that is uninsurable. The gold chalice should be kept in a locked compartment or safe when not in use to be insurable.
Each art or antique item needs to be listed carefully on the policy. Updated appraisals will be needed periodically. The owner is responsible for the appraisal.
The insurer can “repair” or “replace” when damage or loss occurs. Replace means to give the owner the money amount agreed upon in the insurance contract. Repair means the insurer will provide enough money to repair the item up to the agreed limit of the policy.