Risks & Cover
Why do you need Art & Collectable insurance?
Art and Collectables are at high risk of being damaged by fire, water, accidental damage or stolen. Why is this the case? Its a the nature of the asset. They are made of materials that are fragile, flammable or susceptible to water damage. They are a target for theft because they are portable and valuable. Simply put, you have allot of your personal wealth tied up in an asset that has a high risk of physical loss. Read our Blog ‘Where for Art Thou, Insurance‘ to read some of the risks you face.
If you are a Private Collector then you should consider specialised Art Insurance because its typically better cover than the cover provided under a Home & Contents policy.
If you have a Self Managed Super Fund, then you have to consider insurance by law.
The new regulations require that collectables and personal use assets (artwork, jewellery, antiques, coins etc) are insured in the name of the fund within seven days of acquisition. The rules apply immediately to all new investments in these assets made on or after 1 July 2011. If your SMSF held an investment in a collectable or personal use asset prior to 1 July 2011, it has until 1 July 2016 to comply with the rules.
What are the key issues?
- The policy must be in the name of your SMSF. For example, you are not allowed to cover these items under your Home & Contents policy.
- You are allowed to store, but not display, the artwork, other collectables and personal use assets in the business premises of a related party of the fund. However, you can’t cover the assets under your Business Contents policy. The SMSF must be the recipient of any compensation payout not your business.
- You are allowed to lease artwork to an art gallery (provided the art gallery is not owned by a related party of the fund and the lease is on arm’s length terms). The artwork is still required to be insured in the name of your SMSF, regardless of whether the art gallery has its own insurance policy.
- You can store your artwork newly acquired artwork in a professional art gallery (which may already have insurance in place) but you are still required to have your own insurance policy for the artwork.
- You do not have to have a separate policy for each asset. You can have a ‘group’ policy to cover all the assets provided that they are clearly identifiable as fund assets – that is, separately insured from other assets of the trustees.
If, after reading this you determine you would like a quote for Art Insurance then please complete and return the Proposal Form below: