One of the most common questions I get from art appraisal clients is whether they need to spare the expense of an Insurance Art Appraisal Report, and if so, how often Insurance Appraisals need to be reevaluated. There is a great article on the topic just published on the Appraisers Association of America's website by Edward Yee. Click to see the Full Article.
To answer my first question: Yes, most insurance companies require appraisals on artworks valued at over $5,000. This means any artwork (i.e. California paintings, mid-century sculptures, figure drawings, impressionist watercolors) worth $5,000 or more -- need Insurance appraisal report. This will enable you to protect your artwork in the case of damage, theft, fire, loss, etc.
In terms of art appraisal reevaluation, it is essential that insurance values be diligently updated every 2 years, even during stable markets. In Yee's article he says it is particularly important to evaluate works when there are either rapid increases or decreases in values. As an insurance client, is important to know the current value of your artworks so as to properly protect them. For clients who have artworks that have risen in value, but have not been reappraised at a higher price, will only be compensated for the old appraisal price in the case of loss, damage, or theft.
For artworks that have decreased in value, paying for a updated art appraisal can save clients money on their premiums. For instance, in the case of damage to an artwork, insurance carriers may question and ultimately refuse to reimburse a client for an artwork that is overvalued in an old appraisal (even if the client has been paying a high premium based on the overvalued artwork).
Another benefit to having consistent updated appraisal done is for future donations to museums. "Insurance appraisals can also, in some instances, serve as a strong basis for future donation appraisals, particularly if retail sales records have been maintained over a period of time and values have been updated every few years," says Yee. Since Charitable Donation Appraisals are often contested by the IRS, collectors want to make sure to have a reliable basis for establishing an artwork's market value.
All in all, while an Insurance Art Appraisal may seems like an extra expense, you are protecting yourself and your financial future if you have art in your home.
To answer my first question: Yes, most insurance companies require appraisals on artworks valued at over $5,000. This means any artwork (i.e. California paintings, mid-century sculptures, figure drawings, impressionist watercolors) worth $5,000 or more -- need Insurance appraisal report. This will enable you to protect your artwork in the case of damage, theft, fire, loss, etc.
In terms of art appraisal reevaluation, it is essential that insurance values be diligently updated every 2 years, even during stable markets. In Yee's article he says it is particularly important to evaluate works when there are either rapid increases or decreases in values. As an insurance client, is important to know the current value of your artworks so as to properly protect them. For clients who have artworks that have risen in value, but have not been reappraised at a higher price, will only be compensated for the old appraisal price in the case of loss, damage, or theft.
For artworks that have decreased in value, paying for a updated art appraisal can save clients money on their premiums. For instance, in the case of damage to an artwork, insurance carriers may question and ultimately refuse to reimburse a client for an artwork that is overvalued in an old appraisal (even if the client has been paying a high premium based on the overvalued artwork).
Another benefit to having consistent updated appraisal done is for future donations to museums. "Insurance appraisals can also, in some instances, serve as a strong basis for future donation appraisals, particularly if retail sales records have been maintained over a period of time and values have been updated every few years," says Yee. Since Charitable Donation Appraisals are often contested by the IRS, collectors want to make sure to have a reliable basis for establishing an artwork's market value.
All in all, while an Insurance Art Appraisal may seems like an extra expense, you are protecting yourself and your financial future if you have art in your home.
(Alissa J. Anderson does Insurance Appraisals, Fair Market Value Appraisals, Charitable Donation Appraisals throughout Southern California including Santa Barbara, Santa Ynez, Ventura, Westlake Village, Thousand Oaks, Ojai, Moorpark, San Luis Obispo, Pismo Beach, and the Tri-Counties.)
