One morning in April, Katja Zigerlig woke up to find sunlight streaming into her New York apartment and touching upon a painting on the wall.
Instead of reposing in bed, as some might have done, she sprang into action, installing a shade on the upper tier of the north-facing French-style window to keep her artwork shielded from the potentially damaging rays.
"When I originally hung the painting in January, I made certain that no sunlight would hit the painting, and the painting is over one metre away from the window. Obviously, the sun changes its course over the year and I have to adapt to protect the painting from gradual deterioration or fading," she said.
Ms. Zigerlig is not your average art collector. As assistant vice-president of fine arts, wine and jewellery insurance for the Private Client Group division of Chartis Inc., her livelihood depends on being able to foresee how a valuable object's treatment can affect its worth.
According to Chartis, the global art collecting market is worth $50-billion (U.S.) a year, with strong sales expected in 2010. In February, Alberto Giacometti's bronze sculpture Walking Man I sold for a record $104-million at a Sotheby's auction in London. Increasingly, buyers are looking at art collecting as an investment rather than a hobby.
Unlike stocks and bonds, an investment in art can and should be protected, Ms. Zigerlig says. She recommends collectors contact an independent insurance broker, who can give impartial advice about different companies and their coverage, including private collections insurance, which has more sophisticated coverage than regular home insurance policies.
With increasing demand and rising prices comes increased risk of theft and fraud. The FBI estimates $6-billion worth of art changes hands each year on the global black market.
Last week at the Museum of Modern Art in Paris, five paintings by Picasso, Matisse, Braque, Léger and Modigliani valued at $120-million were slipped out a broken window in the night. The museum's alarm system had not been working properly since March, French officials said.
While theft is a concern, for most art collectors, the bigger threat is human error, Ms. Zigerlig says. A painting hung too low behind a dining room table could be bumped by a chair, for example, or damaged by smoke if hung over a fireplace. A statue placed at a busy corner could be knocked over by a running child.
She recalls a client who lost a valuable piece of his collection to an open window: "The wind came in and knocked over this Picasso ceramic."
Sharlene Locke, president of personal insurance practice at HUB International Ontario Ltd., says collectors of fine art should look for an insurer with an art expert on staff, who understands art and is up to speed on current trends. A policy that will offer current market value, along with coverage while a piece is undergoing restoration, is important, she says.
Jewellery collectors should look for a policy that includes a 150-per-cent replacement clause and offers a cash settlement instead of replacement, Ms. Locke says. "You can't replace an heirloom but you can buy something else." For wine collections, she recommends a policy with coverage for vibration and temperature change.
Each province has its own insurance brokers' association, which can help connect clients with brokers. Ms. Locke also suggests asking friends and neighbours for referrals.
"You want a broker who understands your lifestyle. It's not unusual to have expensive jewellery, art or more than one fur coat. Also, many times, the affluent have multiple residences, either throughout Canada or internationally, so dealing with a broker who has international capabilities is important," Ms. Locke adds.
For her own collection of works by emerging artists, Ms. Zigerlig has a private collections insurance policy because the standard policy for her apartment does not offer the coverage she needs. "If I lost everything tomorrow, I wouldn't be able to cut a cheque to replace everything because a few of the artists have gone up in value."
For others seeking to protect a private collection, here are some tips:
Read the fine print. Make sure you understand your policy. There are different types of coverage, different valuation clauses, and not all policies cover the full value of private collections. You don't want to find out after a loss that you are not insured under certain scenarios, so ask your agent if anything is not covered.
Speak to an independent insurance broker. Insurance brokers can point out any holes you may have in your coverage. They offer a choice of insurance providers and can provide objective advice on products based on your needs. Before choosing an agent, check their credentials, knowledge of the market and find out if they offer services that can reduce or prevent risks to your collection.
Keep track of your collection. Take pictures of your collection, and keep receipts and other documents that support the value of your assets well organized. Storing those documents offsite will keep them safe in the event of a fire.
Get regular appraisals. Before you can get insurance or do any estate planning, you need to know the value of your assets. This is especially important for artwork that has gone up in value.
Get a vulnerability and disaster appraisal. This report will highlight potential threats and minimize the risk of damage owing to flood, fire or theft. In areas prone to earthquakes, hurricanes or wildfires, it will provide an emergency plan for protecting a collection.
Manage transit risks. According to Chartis, 48 per cent of art losses that are claimed in North America are through accidental damage during transport. Ask your broker for tips on packing and shipping. If you are planning to exhibit any of your collection, tell your insurance provider first and ask the vendor for proof of insurance and security. Don't travel with expensive jewellery. If you must do so, put it in your carry-on bag.
Manage storage risks. After a move, hang art as soon as possible or store it in a safe, dry area that will not be prone to water damage. Keep your jewellery in more than one location in your home or in a safety deposit box. Keep wine in a climate-controlled area.
Be a good security risk. Clients who have proper security, keep a detailed inventory of their collection and get it appraised regularly get a better insurance rate from their providers.