One of the challenges a broker faces when there is a claim is to manage the expectations of what the client wants to be paid, versus the policy response, that will place the client back in the same financial position as before the loss. The beauty of an Agreed Value product is that everyone knows up front what the total loss settlement amount will be.
However, that only works if there is a proper, up-to-date valuation or purchase invoice on record.
Art and Collectables are unique in that they are one-of-a-kind, irreplaceable, and appreciate in value. There is no one-size-fits-all average appreciation increment that applies to all collectables – such as the average increase applied on home contents annually.
Values can change unpredictably. Some may even increase dramatically.
Take young South African artist Nelson Makamo for example, when Oprah Winfrey and Trevor Noah announced that they have his works in their collections – suddenly the demand increased and values skyrocket!
Conversely, if there is an influx of fakes and forgeries in the market imitating an unfortunate artist’s work, collectors may become wary of purchasing their creations, and the value can drop.
If an artist is recognised internationally, the rate of exchange in currencies can have a major impact on the Rand Value.
To avoid dissatisfaction in the settlement following a loss, we recommend that old masters be revalued every two years, and contemporary artworks on an annual basis.
There is a risk in assuming that a standard household asset inventory is a true valuation. We often see examples on an inventory that show “3 x oil paintings with a total value R 450 000”. If there is a loss, it is not clear what the value of each individual item should be, and the claim process can become complicated and lengthy.
A professional valuation of art and collectables provides several benefits:
- a documented proof of ownership
- An independent professional valuation with an agreed value
- a clear description of the dimensions and materials
- if the valuation is less than 24 months old, the Appreciating Asset clause applies (refer to the Collector policy wording on our website)
A claim with a recent valuation is straightforward because all parties know what will be settled, whereas without valuations, there is often very little documented proof of the value and ownership of an artwork.
In the event of accidental damage, the client chooses if they want to give iTOO Artinsure the damaged work and get paid the agreed value, or if they would like to have the work restored. If restoration is chosen, Artinsure will arrange for the professional restoration of the damaged work. The restored work will then be professionally valued by a third party valuer post-restoration, and if the value has dropped from the original valuation, Artinsure will return the restored work to the client, as well as the cash payment for any depreciation in the value as a result of the loss.
It is certainly in the client’s best interest to obtain a professional valuation for their valuable collections. Whilst iTOO Artinsure do not perform any valuations, we have compiled a national panel of professional valuers who can assist the client by providing a valuation for their precious possessions. The details of this panel can be found on our website.
