Join Cecelia Walls, Assistant Director, Learning Content & Operations, Adrienne F. Reid, CIC, Senior Vice President at Huntington T. Block Insurance, and Carli Helfer, Account Executive at Huntington T. Block Insurance for an “Ask the Expert” session focused on museum collections insurance. Whether you’re new to insurance or looking to fine-tune your existing coverage, bring your questions about risk management, policy types, valuations, and more. Get practical advice tailored to the unique needs of museums and their collections.
Resources:
Ask the Expert: Collections Insurance PowerPoint slides
Transcript
Cecelia Walls:
Hello, everyone, and welcome. I’m Cecelia Walls, assistant director of learning content here at AAM, and I’m so glad you could join us for today’s ask the expert session on collections insurance.
We know insurance can feel a bit overwhelming, especially when it comes to protecting your collections, and that’s why we’ve invited two fantastic experts from Huntington t block insurance agency, Adrianne Reid, and Carly Helper, to help break things down and answer your questions. Adrianne, who is based in Houston, Texas, is senior vice president at Huntington Block. And has worked in fine arts insurance for over twenty years. In her current role, she provides fine arts insurance broker services. To museums, universities, collectors, and art shippers. Carly, based here in Washington DC, has been with Huntington for five years as an account executive, and she works with museums, historical societies, galleries, private collectors, artists, and conservators across the country.
Thank you both for offering your expertise here today. Carly is having a little bit of a technical difficulty, but she will join us as soon as she’s able.
But Adrian is here. And this webinar is meant to be an open and help conversation, so please drop your questions into the q and a tab on the right. This will help us keep track and make sure that all of your questions get answered.
And if you need to ask your question anonymously, you can do so by clicking the little box at the bottom of the post a question area in the q and a tab.
So I will let Adrian take it away from here.
Adrienne Reid:
Thank you so much, Cecelia. It is such a great pleasure to be here today. And hopefully, Carly will be able to join shortly. I see in the chat a lot of people joining us from all over The United States and even internationally, so that is really exciting. And, you know, we really wanted this to be something of an interactive session.
So please feel free to put your questions in the chat. And, you know, just let us know if you have something that you’d like to, to discuss. I also just wanna throw out a question, just to kinda kick things off and say, you know, how many of you handle insurance at your museum? Or, you know, work with collections insurance? If you if you could put that in the chat, that’d be great.
And, Cecelia, if you don’t mind, just letting us know what’s going on in the chat, and then I’m going to pull up the presentation, while you, can moderate that if you don’t mind.
Great. Thanks so much. Do we have some, good Awesome.
Cecelia Walls:
Yeah. We’ve got most people saying yes that they do work in collections within collections insurance, some minimally, but others, more so.
Adrienne Reid:
That is great. Okay. So I am sharing the PowerPoint.
Can you confirm that you can see it?
Great.
Okay. So thank you so much, everyone, for being here today. Just as a part of our introductions, like Cecelia mentioned, thank you so much for joining.
Huntington T. Block is the oldest and largest fine art insurance broker in The United States. We were founded in 1962 by Star Huntington T Block.
We’re based in Washington DC, but we also have offices in New York, City, and I’m based in Houston. We work with museums, store historical societies, collectors, conservators, artists all over across The United States. We’re endorsed by AAM and by the American Institute of Preservation, of Historic and Artistic Works.
So when we talk about collections insurance, we like to just set the stage with understanding, like, what’s at risk.
First and foremost is the permanent collection. And then second are items on loan to institution.
So this could be long term loans or short term loans. And then we also would consider rent’s library as a part of what’s at risk when we talk about collections insurance.
Risks at phase the collection can be very varied, greatly. But predominantly, we’re talking about water damage. That is the highest cause of loss that we often see a museums across the country. Mainly, actually, internal wall damage. So a pipe leak, or a freeze that causes pipe leak. Also flooding, as we all know and experience, is continuing to be a significant risk and a growing risk even for institutions that are not in flood zones.
Of course, wildfires top of mind, for us in insurance industry. As, you know, climactic conditions continue to change.
In addition, hurricanes and increasing convective storms are significant cause of loss. Convective storms are really, what you would describe as storms that just sort of pop up, and are not related to a hurricane or cyclone, but can happen all over the country. And cause significant damage, particularly with hail and wind. Theft is another form of loss that we see across the, the museum sector specifically. And then, of course, transit and handling damage that is your most common cause of loss that you see.
So one question that we often get, you know, is of course, everybody is familiar with the 10 agents of deterioration. And hopefully, you have something like this, you know, wheel at your museum, and you’re thinking about all these different types of area, agents of deterioration, as your addressing your risk management procedures in the museum. So the question is,
Cecelia Walls:
Hi, Adrian. I’m so sorry to interrupt. The PowerPoint is not advancing. It’s just on the first slide. So if you could put it in presentation, mode or yeah. There we go. There’s the wheel.
Adrienne Reid:
yes. Yes. Okay.
Oh, okay. Alright. Is it okay now?
Cecelia Walls:
It’s still not in presentation mode with the full screen showing the slides. But it is showing the slide.
Adrienne Reid:
Let’s try now. Is it in presentation mode?
Cecelia Walls:
No. You might have to share it in presentation mode.
Adrienne Reid:
No. Okay.
Cecelia Walls:
Take it off and then
Adrienne Reid:
Yeah.
Cecelia Walls:
share.
Adrienne Reid:
Okay. Can I keep it the same?
Cecelia Walls:
If someone could put in the chat whether it bothers them or not, we could move forward.
Adrienne Reid:
I’m gonna keep going this way if that’s okay.
Okay. So when you talk about, you know, collections insurance, does it address the 10 agents of deterioration?
And so really, you know, thinking about all of those things that can impact the physical condition of an object, whether that be incorrect relative humidity, pests, water, fire, like talked about, pollutants or, you know, light damage. And the collections insurance is designed to cover physical loss or damage to objects, it and then we’ll talk about how that bridge applies, but the key, thing to keep in mind is that insurance is intended to cover accidental loss, or sudden events like so something that is not intended or not expected and suddenly happens to the object. Something that out outside of the object that causes it to have physical damage. And so insurance, specifically for collections insurance and all risk policy, and it covers all physical loss of damage. Everything you can think of that can happen to an object except for what’s excluded.
So it’s really important to understand when you’re looking at your collections insurance, what the standard exclusions are. Unfortunately, for fine art collections insurance, it’s very minimal. The first exclusion is a compilation of the first two. Which is wear and tear, gradual deterioration, and inherent vice. This is something when the object that causes it to just over the course of time to deteriorate or break down, or just due to the general life expectancy of the object. The second part of that exclusion is the repairing, restoration, and retention exclusion. And that means intentional actions done to the object during treatment itself. So, if in a conservator, for example, in this unfortunate conservation situation involving the painting, by Mario. If a consider intentionally does something to the piece, in their process and it’s wrong and it causes damage, that would not be covered under the policy.
Event and a handling damage, and that would be covered under the policy. So important distinction there. The second and third exclusions on a fine art policy are related to war risks and nuclear risks. These are pretty self-explanatory, but and you’ll see them on all insurance policies. War meaning, you know, acts of foreign governments against each other, insurrection, rebellion, that sort of thing. It is not intended it does not mean civil unrest or civil commotion those type of things. Those are considered sort of vandalism events that are covered under the policy. And then, of course, nuclear we have bigger problems if that comes up.
So an example of a question that we often get is, the museum I work at has a significant collection of Native American bead work, which fragile and prone to deterioration, with this damage, from inter advice, I. E. The thread break due to age, be covered or would it be excluded? And so as you think about what we just talked about in terms of the exclusions, the answer may seem pretty clear. Inherent vice is a listed exclusion on the policy. And so we’d say, well, it would be excluded.
But I would, I would add an asterisk to that because we don’t know if something happened to the object that accelerated or spurred on that breakage. So if there was a bridge, let’s say, in the HVAC system that caused the temperature and humidity to spike and change very suddenly, and that ended up accelerating thread breakage. And there could be an argument to be able to put forth a claim because there was a sudden event that was, acted upon the object that accelerated the damage of peace. But if it is something that there’s no pinpointable you know, haws of what happened to the piece, that it would be considered an inherent bias situation.
Another question that we can get sometimes is, for example, during Hurricane Sandy, several New York museums experienced flooding. If our storage was impacted by a natural disaster like that, would our policy cover water damage and associated excavation costs?
And that’s such a great question, because even institutions and cities that haven’t ever experienced flooding before or now all of sudden, experiencing flooding. And it could be something not even related to a hurricane, like we saw earlier this summer in Kerrville. And so, yes, the policy is intended to cover a catastrophic losses related to natural disasters.
But an important distinction that, this sort of scenario brings up is the difference in policy coverage between a partial loss situation and a total loss situation. So a partial loss is something that damages the object but doesn’t completely destroy it. And so the way that a fine art policy responds to that it covers the restoration cost and repair plus resulting depreciation and value. Of course, that would never be exceeding the full value of the object. So in other words, underwriters aren’t gonna pay more to repair it than the object intrinsically what the worth of the object is. Now a total loss would be a situation where it is. It’s a complete it’s a completely destroyed object. It’s it the total value, has been wiped.
And so in those from SANSA’s the underwrite piece for the full loss of the object And then this, what they call, salvage is surrendered to the insurance company. This is really more rare, situation. Most of the time, we’re dealing with partial SIS. And so, you know, it’s all about, you know, restoration, for repair, getting the object back to the museum or to the lender, but paying for that report, resulting depreciation and value if that’s needed. So, Cecelia, I just wanted to stop and pause and see if there are any questions in chat.
Cecelia Walls:
I believe we do have one question any suggestions for how to best navigate permanent loans and insurance coverage?
Adrienne Reid:
Oh, that’s such a great question. We will talk about, loans, further in the presentation. So, yeah, thank you for bringing that up.
Any other questions?
Okay. Okay. You guys gotta come at me with some questions. We need some oddball questions here.
Like, Stoney, let’s go. So we also get often, asked about, you know, difference in valuation. So this is scenario says we own a Rembrandt etching that’s purchased years ago for $250,000. The market has since risen, and now it’s valued at 400,000. How would the policy yeah. Would it pay the higher market value, or would it pay the lower inventory amount? And so that brings up the topic of how the policy responds to valuation.
And, from a property owned by the insured perspective, the valuation is the higher price paid or current market value. And so in the scenario, that we the of the rim brand, in that case, the policy would pay 400,000. Because that is the higher of price paid or current market value. Usually, most of the time, the valuation’s current market value because oftentimes, the price paid is know, something many, many, many years ago. But there could be a situation where an object was paid for, say, last year, and then all of a sudden, the market value of the piece tanked, and so the policy would pay the higher the price paid.
Now with loans, it’s different. The valuation is agreed value, and so that based off of the loan agreement or, you know, other documents that that are that that we there, in terms of an agreement between the owner and the and the borrower. If there is not an agreed value, then the policy would pay for current market value. So if a lender doesn’t offer value, then, the policy still responses. It’s just, there it would be a little bit more, involved process to determine the current market value of the piece. And when we talk about the policy coverage, we really are talking about a blanket coverage basis. A lot of times, institutions will ask, well, do I need to submit to you a complete inventory of the, of the collection to you for the insurance money?
And the answer is no. We, that would be insane. If we asked all of our museums that we had ever which are over a thousand museums, send us their complete collection inventory record That would just, be a lot into cumbersome. So, you know, the policy is a bucket limit. And it applies to property of the insured and property of others. There is no scheduling, you know, or inventory records that you know, the insurance company has on file to, to look at. Now if there are multiple locations, like, say, like, a lot off-site storage location, or, for example, we ensure a lot of state entities or university entities that will have different locations, the policy can cover those for different locations under the blanket limit as well, which is really great and very flexible. So let’s flip the situation with the REM brands. Let’s turn it on and add and say, you know, let’s say that this Rembrandt was actually a loan to the museum. And the lender provided a loan agreement value of 400,000, but the market value was 250,000. How would the policy respond? So sometimes we get asked question, well, what if a lender comes back and on the loan agreement, they have a clearly exaggerated number of the value of the peace. How does the policy respond to that? And the answer is that coverage is based off of the agreed value, which is the loan agreement value. And it is under one’s best interest to have an agreed value.
Because it makes the claim process much more clear. But we do, you know, want to see that those values are reasonable And if there are situations where, the value seems odd or isn’t, you know, being, in line with what you’re seeing with everything else, then please don’t hesitate to ask for documentation to confirm the value. Or just blame it on insurance and say the insurance people are asking for Sometimes those scenarios come up and it’s just a matter of perhaps a lender doesn’t, you know, doesn’t any value, and they’re just they’re making up a value. You know, this is a good way to sort of make sure that that great value is based off of some type of appraisal or some type of record.
The loan agreement really does help establish, number one, the insurable interest of the museum. In other words, that the museum is responsible for ensuring the loan. And then to what that responsibility period is, which we’ll talk about in a bit, And then, of course, three is the value, which would be the agreed value. But understand that loan are covered automatic under the blanket policy collection policy for the institution. Any questions, Cecelia that you’d like to bring up?
Cecelia Walls:
Yeah. Looks like we got a couple more. How is market value determined for unique and irreplaceable items?
Adrienne Reid:
Oh, wow. You are leading right to our next question. I love that. So let’s use this scenario because I think this is, sort of similar to what, what the participant is asking. Our collection includes archeologic objects that cannot be replaced. How is the value determined in case when market replacement isn’t possible?
And when we say current market value, that is an evaluation method that is, you know, clearly defined by, appraisal associations and The US you know, appraiser standards, to understand what comparables are looking at and how they’re coming about getting that value. However, if there are situations where objects are rare and you think, there is not possible to find a comparable, it doesn’t mean that it’s irreplaceable. And so it’s a matter of adjusting and understanding what talking with in talking with specialty dealers and appraisers, you know, what are some similar, if not exactly the same object, something comparable that, that would that could use to determine the current market value of the piece. And keep in mind that the appraisal is done plus. So, you know, this isn’t something where you’re having to go and get an appraisal on every single pottery object in your collection or archaeological object. No. This appraisal would be done after the loss. Is it helpful to have appraisals Absolutely. But it’s not required. And the other thing I would mention is that even if you couldn’t, or sorry. If you couldn’t replace the object, you still could use those funds to cover rest restoration costs.
I’ve had a situation where there was a failure of a shelf in a museum, and it had an ancient antiquity object. And it broke it shattered into literally I’m gonna say a 100 thousands of pieces, like minuscule pieces. It was it’s it was very, very fragile. And the museum really wanted to go ahead and do the work, the conservation work to try to put this thing back together. And it and it was an extensive process. It took over a year for their conservators to do it, but it felt like it was a worthwhile endeavor. And at the end of the day, the insurance company said, great. You do that.
But there is a cap on, you know, how long you’re gonna spend working on repairing and restoring this object. And during a different checkpoints during the process, they would check-in as are still do you still wanna keep trying to do this? And they it’s and so the end of the day, the insurance company covered all of its restoration costs but that was capped at what the actual, you know, market value of the piece was. At the end of the day.
So it all ended up being a really successful endeavor and circumstance for them to be able to not only for their conservators to learn more and use it as a use case of education, like to also to get the object back, which is great.
So a policy limit is the maximum that the policy will pay out in an in a catastrophic loss. And so your limit should encompass or take into consideration your permanent collection value and any loans that you’re responsible for. And so a question that we often get asked is, well, how do I determine what policy limit is appropriate? And so the first thing you should consider is, okay. What are what’s my loan activity? Throughout the year? What does that look like for the year ahead?
And in this circumstance, you can see that they have in, in this scenario in the purple, they have a little usually less than 50,000 loans, throughout the year except for an exhibition, clearly, that’s come in during December through February. That bumps it up to a 100,000. Then we add on top of that, the permanent collection total value. Right? And so the question would be, well, what limit should we buy for the year?
And there are two routes that you could go. One would be, you know, to purchase a limit that presents that covers full amount of your loans. And some, account for your permanent collections. So say, like, 200,000. Keeping in mind that perhaps you think that there would never be a situation where there is a total loss the entire collection and the entire museum the same time. But we would recommend would be purchasing a limit of like 350,000 that would cover you for the entire period of time. You could also go for a limit of 300,000 and then bump up limit on a short term basis for those months that there is an increased amount of on-site. So there’s a couple of option scenarios to look at. The important thing to keep in mind is that you’re looking at a museum’s limit of insurance for collection, that the loans reviewed 100% throughout the year, and that you have taken into consideration the permanent collection totaled out and what limit the museum is comfortable, with purchasing.
Any questions, Cecelia, that that you’d like to bring up?
Right now?
Cecelia Walls:
We have we have gotten quite a few in there now. So I will, start going through. A couple of them you’ve kind of touched on, but I will go ahead and ask them here anyway. But what about archival? Or historical collections as opposed to fine art collection? How are those values determined? And does a lack of an inventory still apply here?
Adrienne Reid:
Great.
Should
Yeah. That’s a great question. We ensure a lot of state archives, for example, that’s kind of coming to mind.
And they are covered under the collection insurance and can be quite valuable. It’s very difficult to you know, you’re not gonna get an appraisal of every single, you know, piece of paper or object. Within those archives. But there are appraisals that can be done that are more, sort of, they call a lumping into different categories. Of different levels of objects. And so then kind of coming up with a broader understanding of how much value we’re looking at. But, yes, those are covered to the policy.
Cecelia Walls:
So when you’re talking about, creating those kind of lump things or port sections of objects that are together and like kind of objects or when you’re trying to figure out what that maximum probable loss might be for your permanent collection. Is it an appraiser that you’re bringing in and kind of looking and assessing, or is there another person that you might
Adrienne Reid:
Yeah. An appraiser is the best case scenario. Because they are a third party.
And they are qualified to do the work.
Thou that, you know, you can augment that with your own staff you know, research, to be able to maybe even, you know, put them on first phase. Or at least to identify let’s say, like, top 10 highest valued objects or most critical objects to the institution. And get those appraised. Sort of triaging, if you will, you know, the importance and the significance of those objects and which ones to prioritize getting an appraisal for. But a third party appraisal is the best, the best option to go with. It can be expensive. And so instead and look at values, getting updated values, on an ongoing basis, but kind of rolling through the collection, if that makes sense. Great.
Cecelia Walls:
And I think if I’m remembering correctly, there is an association of or a society of appraisers that you can look up appraisers.
Adrienne Reid:
Yes. Yes. And the appraiser that
Cecelia Walls:
Do you wanna move?
Adrienne Reid:
Yes. And the appraiser that you would be you would wanna engage with should be a member in good standing with one of those appraiser associations. Can you see my next screen?
Okay. So the next question kind of pits us to talk about, artworks traveling and specifically exhibitions, if we’re sending something to another state, does the policy cover it? When it leaves the building or only when it arrives at borrower’s institution? And this sort of brings up the topic of what term wall to wall means. This is also where referred to as nail to nail, and it is, from the moment it’s removed, the object is removed from its normal place. And while it’s in transit, while it goes to the other institution, in order transit, and then when it’s returned back to the institution that it originated from. This is a common term that is used, on loan agreements. They’ll usually see it Personally, I would love it if the industry shifted to a condition report to condition report terminology because I think that that’s more appropriate, and I’ll talk about that in a minute. But wall to wall actually means you’re covering it transit, on premises, transit again.
And we can do that under your museum policy because there are transit in other locations limits that are automatically included in a collection insurance policy.
So, for example, if you have an institution that has a premises limit of a million dollars, that that’s a blanket mink covering the collection and any and any property of others. They often have included in their policy a $250,000 handset limit that would then cover them worldwide for any transit coming going from the institution. Similarly, they would have any other location limit that could be used for short term exposure. So for example, if you need to send something to a conservator or a very short, you know, pop up off-site situation, you can use any other location limit for that. It’s not intended for you to cover any, under any other locations, like lending out to other museums.
Because we should be covering it. And the reason is because you wanna transfer the risk away from your museum. You wanna do that in two main scenarios. The first is if you don’t have any control, for example, with incoming transits, of how they’re packed. Right?
Let’s say you’ve got an artist that is just really insistent on, putting the artwork in their pickup truck and bringing it to the museum and dropping it off. Well, you don’t know how that object your arc has been packed, and you also don’t really know how great of a transit you know, a situation environment is. And so in those cases, you would wanna say, okay, you will take insurance responsibility when it arrives at our museum.
But we’re not responsible for the incoming transit. And similarly, if you’re sending something out to another museum, they should be insuring it. Because the bottom line is that anytime you have an object in your care custody or control, you should be responsible for ensuring it. And similarly, it’s with some other institution, should be insuring it. And the reason you wanna do all of this is to protect the museum’s law record, which is really, really important because it impacts the overall premium that you’re paying every year, year in, year out. And if there are claims on your policy that are caused by losses that were outside of your control, you know, that adversely impacts the museum for something that wasn’t in your control.
And I mentioned about condition reports. And I really can’t stress off how important condition reports are. Even if you’re not able to do a full condition report, everybody has a smartphone with, you know, with cameras, and pictures should always be taken.
Anytime that there is a transfer of insurance responsibility. Because there has to be some sort of documentation that indicates the preexisting content of the piece so that when there is a change in that insurance responsibility, we can tell and know and have records that show, you know, the condition of the piece before and the conditioner piece after repairs were returned. So incredibly important for documentation purposes. If you’re not doing that at your museum, if you’re not having a clear point of condition checks, when you’re taking insurance responsibility, that would be your number one priority to go ahead and do that. Because it’ll save you and your museum headaches, and perhaps difficult situations in the future.
So one question we get, is, like, for large traveling exhibitions, does the institution, the borrowing institution, ensure all our work separately, or is there one master policy for the, for the tour?
Ensures the premises, ensures the coverage of the exhibition while it’s at their museum and then the outgoing prem, transit coverage.
Until it arrives at the next venue. This is a very common route of coverage for our traveling exhibition, I call it the patchwork, option. Because it’s really just sort of patching policies onto each other. And the benefit of it is that there’s usually no expense. And each venue is responsible, you know, if their own lot losses. So if there was a loss, it would impact their annual loss record. It wouldn’t, you know, they wouldn’t be having losses that impact their law record that were caused by another institution.
The downside about it is that you’re patching coverages together. So lenders, will get different certificates of insurance. And there may not be consistency with the coverage between the different venues. So that can provide that that can, challenges. And then of course, is the whole the whole, you know, importance of having those condition checks each time there is a change in insurance responsibility. So because you need to be able to see exactly when the loss occurred, and which policy it falls under. So you can see that there are really different many ways of ensuring, traveling exhibitions. We see all of these ways, in in many different, exhibitions, whether it be you know, your Blockbuster show or even just a small, you know, package show that gets moved from venue to venue. It just depends on the participating, the organizing it institution, the venues and you know, what the goals of each of those are.
One question that we get is if there’s a traveling exhibition and it’s canceled, for example, do you, like, wildfire smoke damage, in the galleries, would the policy incur lost ticket revenue or only the object damage?
And that really brings up the distinction between what collections insurance is and what property insurance is. So collections insurance is for visible damage to those objects. Period. It’s not intended to cover ancillary up coughs that are associated with numb damage or, to the objects. Property insurance is intended to cover physical damage to the building and the business property.
Usually, in property insurance policies or packages, they do have business interruption insurance. And so that that triggers when there’s a covered loss, for example, fire damage, and operations are interrupted or suspended, the insurance will then compensate the institution for lost income, and ongoing expenses that may occur during that period of time. So, you know, that’s the, where, you know, in that question is asked about loss revenue, lost ticket sales, that would be a business interruption, insurance.
Expense or exposure. The physical damage to the object would be covered under the collection insurance policy. So another question we often get is museum is covered through a local insurance incident. This guy here living on the beach, I guess, and riding insurance.
Why should I have specialized coverage for our collections?
There is very big difference between a commercial policy and a fine art policy. And, basically, a commercial policy sometimes will have limited coverage for artwork. It’ll literally either exclude fine art or not be accurate. It could be based off of, depreciation and not really provide you with current market value. And then they like would not cover wall to wall exposure.
With the fine art policy, it’s specifically designed for collections. And of course, we’ve got that better evaluation clause that we talked about. And it does cover wall to wall. So those incidental transits coming and going. I would say, you should watch out for. Cecelia, do we have any questions right now?
Alright. Am I back? You know, that’s okay. We’re almost at the tail end, and, I think I’ll just I’ll just keep going here, where we’re at. So, you know, in conclusion, you know, fine art insurance is a very specific and nuanced coverage, and it does require x expertise, from a specialist. And so I’d encourage you to make sure that you have strong communication with your broker They understand your collection and know some less prevention recommendations and guidance for you. And are able to provide this sort of this nuanced type of coverage for your collection. So, I think with that, let’s we’re I think we’ve got about ten, fifteen minutes left. So Cecelia, could we look at some questions?
Cecelia Walls:
Absolutely. So kind of piggybacking on your last statement about, the specificity of collections insurance. We had a question that was she, they categorized their historic buildings as collection items. Would collections insurance cover them? Or, you know, for repair and things like that, or is regular property in comparable?
Adrienne Reid:
Yeah. Most of the time, a physical building is historic is a property insurance. It’s not it’s not a collection. Now I say most because they we do have certain artworks that are buildings. And they are covered as collection objects. But those type of buildings are not, like, you know, a historic courthouse or, you know, a historic mansion or something. It’s more of a specific art installation. But what you should look for with the store property is on your property insurance, there should be a specialized historic valuation clause that addresses the historic nature of the, the buildings themselves. So that if, for example, there was a damage and you need to repair it with a specific type of marble, that, you know, costs extra, it needs to be sourced from you know, a specific place, then the policy would provide that extended evaluation to be able to, you know, get the repair and restoration.
Cecelia Walls:
So if the building facade had, say, a sculptures by a Cambodian artist, they would kick the deal with that through a collections insurance policy. Rather than
Adrienne Reid:
Yeah. I mean, we do ensure murals, you know, that are attached to buildings. And as statuary, stained glass is something that we often will see. But, you know, those are individual components of the building, not necessarily the structure itself. So I would just really encourage you make sure that you have strong communication with your broker to talk through all of those nuances to make sure that the insurance for responds appropriately.
Cecelia Walls:
Great. So what happens if an object in question is determined to be fake?
Adrienne Reid:
Oh, yeah. So that is not a physical loss. And remember, we’re dealing with property insurance which covers physical loss or damage. That is more of a financial loss, perhaps an emotional loss. It’s not it would not be covered under, a property insurance policy.
Yeah. We see that a lot happening, right now or at least in the past couple years, you know, with, ex of, you know, efforts to repatriate, as much as, ethically, you know, needed. And, again, the physical damage to an object is covered under a commercial you know, a collections policy. The transfer of ownership is not a physical loss, and so that that in and of itself is not something that would be covered under the policy. But if, say, for example, you’re returning some to Cambodia, and while it’s in transit, it’s damaged, You know, that damage, that physical damage would be covered But, you know, the object now not being in the, you know, collection of the museum is not a, you know, physical loss. That’s more of a title issue.
That’s such a great question. You know, it is really incumbent on an institution to do its very best to protect its property. And to do the measures that, you know, we could have a whole other webinar about emergency preparedness and, you know, hurricane prevention all of that. And so you have to do your best. Now you should call your broker, you know, and they should be calling you and you should have close communication. And if there are situations where you know, it’s very clear that there is going to be an imminent damage and it is going to be catastrophic, then, of course, in insurers will do their best to help you. Because it’s in their best interest to, you know, provide, to not have a loss. That being said, it’s not like insurers are gonna pay for moving everything every single time there’s a hurricane warning. Or anything like that. So, I would you know, it’s the typical answer. It depends. But the key really is that the museum you know, within its collection, emergency preparedness should already have a plan in place and be ready to respond to those circumstances.
Cecelia Walls:
Yeah. I cannot hi. Cannot recommend having a disaster preparedness plan written down, ready to go for any potential, disasters that could come your way. It’s just standard risk management as well as having your collection management policy and have all that written down, and ready to go. So
Adrienne Reid:
Yeah. And AAM has some great resources on all of as well. So I would encourage you to
Cecelia Walls:
And people in this field are so generous with, symbols and examples that
Adrienne Reid:
know, reach out to get that. You know, don’t feel like you’re having to start from ground zero, you know, coming up with emergency preparedness plan because believe me, museums have gotten really good at, you know, coming up with great some tricks and best practices for that.
I know. I love that.
Cecelia Walls:
you know, talk to the folks near and around you and in your community. They’re happy to help, I’m sure. So we have someone who has to self-report insurance values for their policy renewal, and they’re struggling to come up with insurance values for their one of a kind musical machines. Any suggestions on how to value those for insurance?
Adrienne Reid:
Yeah. That’s a such a great question. I think that number one, like we talked about, communication with your broker, really important. Start there. Explain the unique situation and scenario, and perhaps they can provide some guidance and resources, to be able to help you. With that, valuation process. But at the end of the day, you know, you can reach out to, x experts in that specific field. You know, there I am sure that there is somebody loves to nerd out on that particular type of object. And is an expert in that space. And, you know, so reach out to that. But you know, keep in mind that the values that you’re reporting to the insurance company every year for your renewal you know, that those are a guidepost. They are not you know, set in stone from a standpoint of you know, okay. Well, this is exactly how much you’re gonna be paid. Because remember, permanent collection, it’s current market value most of the time. Right? Up to the policy limit. And so what’s really important is understanding what the overall scope of value of your collection is from an approximation standpoint and being able to purchase a limit that that represents that, corresponds with that so that you do have enough insurance overall for the institution. So I hope that provides some help and guidance on that specific question.
Cecelia Walls:
Yeah. What happens if the monetary value of a piece is less than the cost to repair it?
Adrienne Reid:
Yeah. You know, I mean, it it’s like I said, insurers will pay the value of the piece, the monetary value of the piece. They’re not gonna pay more for the piece than what it’s worth. So let’s say that a piece is market value is $10,000 but it’s gonna cost $40,000 to repair it. Well, insurers are going to pay a total loss. They’ll cut you a check, for $10,000, and you can do whatever you want with that $10,000. That’s up to you. But they’re not gonna pay above and beyond what the market value of the piece is.
Cecelia Walls:
Yeah. That’s understandable. Is there any standardized or sample of insurance premiums, and how do they know that the proposed insurance premium is reasonable?
They’re new to this area of work.
Adrienne Reid:
Yeah. You know, I think that the key on that one is making sure you have a good broker who is well entrenched and, you know, in this space. So that they can give you multiple quotes from different markets to be able to spot check, the premium that’s being charged to your end institution. A broker should have access to just one market. They should have access to multiple markets. In other words, they’re able to get quotes from, you know, one underwriter and another underwriter and another. And they can lay out for you, you know, the pros and cons and compare comparing those quotes for you. That’s the broker’s job. That’s what they’re there for. So that you, you know, you can go into it, you know, understanding and make sure that you’re getting a full competitive quote.
Cecelia Walls:
Okay. I think we have time for maybe one or two more.
Adrienne Reid:
Well, it depends. I it really it really, really depends. It depends on piece. It depends where it is in your institution, where it is relative to, you know, is it in the galleries? Or is it in storage? How does how does that that piece, relate or compare to value of the p of other pieces throughout the collection, it’s just, it’s not a really straightforward answer. Because it is really a nuanced calculation that goes into determining, the premium that underwriters will charge. So yeah.
Adrienne Reid:
I would say talk to your broker. Talk to your broker. Make sure you have a great you know, line of communication with them and their experience, and they can fight for you and advocate for you. And the case, you know, to not, have your premium go up, significantly. That would be my recommendation.
Cecelia Walls:
Great advice. Thank you so much, Adrianne. I think we’ve run out of time for the questions, but can folks contact you, Adrianne, if they have follow-up with any of their questions that didn’t get answered
Adrienne Reid:
Yeah. Absolutely. You know, I’m might I might contact information is on the invite. But if not, I’m sure we can find a way to get to all the people that registered. I just wanna say apologies for all the technical difficulties that we experience, and I hope that this was, valuable for everybody. Please feel free to reach out. Our team, at Huntington blog, we have an incredible staff that are well versed in all of this. And answer all any and all your questions, related to collections, insurance, and I just wanna thank you, Cecelia, for fielding, all the questions for us. And AAM for, for inviting us to see this exciting topic.
Cecelia Walls:
And thank you for all of your expertise. We really appreciate it. Before we wrap up, I just wanna highlight a couple of upcoming offer at Vef from AAM Come to our next webinar, which is our future chat taking a stand for powerful taking a stand. So it’s a powerful conversation about how museums can thoughtfully tackle when and how to speak out on current events. So that’s with Elizabeth Merritt from the Center for the Future of Museums here at AAM, and Julie Decker the Japanese American National Museum. And our call for proposals for the annual meeting has just been opened next year, May in Philadelphia. So get your proposals in before September 26. And we look forward to seeing you at the next event. And thank you all. Have a great rest of your day.
