Jane Byde is Head of Fine Art at La Playa Limited, a boutique specialist insurance brokerage with offices in Cambridge, London and New York. Her clients include private and corporate art and jewellery collectors, galleries and dealers.
Tell us about your work
As a broker, my job is to listen and understand clients’ needs, assess the products available and advise as appropriate, making sure the client is doing everything they should to make it work for them. We are not employed by insurance companies, nor are we lawyers, so cannot advise on the minutiae of what will be decided in a court of law if anything goes wrong. Ultimately, it is about managing expectations, being a go-between for clients and underwriters and explaining why the cover costs what it does.
What led you to your current role? Are you yourself passionate about art?
I have always been an art lover, visiting museums and galleries from a very early age, so it was natural to study Art History at undergraduate and Museum Studies at postgraduate level. After university I worked for six months in galleries on Cork Street, before ending up in hospitality management, gaining a diploma from the Wines & Spirits Education Trust. In the course of my work, I met many people in the insurance industry who encouraged me to become a broker because attention to client needs is critical for both roles.
I found a role in marine insurance with a top-three insurance brokerage and studied alongside my job for three years to obtain my ACII, which is the equivalent of an insurance 'degree'. Another five years later an opportunity opened up in the Fine Art sector and I jumped at the chance as the role allowed me to progress my career, but utilises my knowledge base and passion for art.
How can you make your insurance work for you?
Many people are understandably frustrated when what they feel is a legitimate claim is declined or the value paid out below what they expect. Frequently though, the reasons for insurance not performing as you expect are simple and result from poor housekeeping which could easily be avoided.
Having an up-to-date valuation of your treasures is critical for getting the most out of your insurance. Most of the contentious claims we see are where an assured has little evidence of the value they are claiming for.
A private insurance policy is usually based on Agreed Value which means that in case of a loss, insurers will pay up to the value of the item as listed in the inventory, which is based on the latest professional valuation of your collection. Insurers expect valuations to be done every 3-5 years. Some insurers will pay an increase to the inventory price to match the current Market Value if prices have gone up since the valuation, but this is often capped at a level which may be insufficient for certain artists and jewellery in particular.
Most auction houses will do a simple low-cost appraisal of your art and antiques whilst professional appraisal firms will do a thorough one for somewhat more. There are many services available and it is not essential to use one of the big three auction houses.
What if you have lots of items to insure? It seems like this could become a bit of a time drain for serious collectors!
All policies covering art and antiques will have a limit at which all items under this value are lumped in together as a “total unspecified value”. Each item exceeding this value needs to be listed on the inventory or schedule, which your valuer will provide. Standard High Net Worth homeowner’s policies usually have an unspecified article limit of £10-15,000, whilst a dedicated art collection insurance policy will normally have a much higher limit of £25-30,000 per item. This means you will only need to list your significant pieces and not every last silver salt shaker.
Couldn’t a wealth manager take care of all of that?
Most wealth managers are not specialists in insurance and in all but the most straightforward cases will involve an insurance broker in your case anyway. In the High Net Worth sector in particular, time-poor clients frequently become highly reliant on their trusted advisers to organise their affairs on their behalf. Whilst strong relationships are an important part of keeping your affairs in good shape, don’t be afraid to question them, talk to other people or set the challenge of proving they are interrogating your coverage correctly. Finally, make sure they are speaking to a specialist broker who is trained and experienced in the appropriate sector.
I have had my insurance policy for years and it seems to suit me fine. Why should I look elsewhere?
Insurance moves with the times just like everything else. Risks that weren’t covered or were costly years ago may be feasible now and vice versa; some elements you have taken for granted may no longer be covered depending on your circumstances or the claims experience of the industry. Take time to consider one or two alternative insurance providers as far in advance of your renewal date as you can, ideally a month or so ahead.
What is the single highest value item you have insured?
A few years ago I helped insure a single cut diamond for display at a well-known London department store, with an insured value of £50,000,000. As you can imagine, the security measures surrounding the item would have fit well into a Mission Impossible script! Individual paintings or antiques are rarely insured on a stand-alone basis other than for exhibition or transit purposes as economies of scale and risk-spread normally mean a collection is best insured as a whole.
What’s the one piece of advice you’d give to someone looking for insurance?
Insurance is built on trust. Underwriters rely on the information we provide them with and if a claim arises from a risk they weren’t informed about, that trust can be broken and problems paying claims may arise. Of course unexpected accidents happen and that’s what insurance is for, but being honest and upfront, disclosing everything can about the risk you are looking to insure is a good start.
Allow your broker to visit your home or spend time chatting to them on the phone and they will do much of the work for you. One of the benefits of using a Lloyd’s Broker over an online tool or a volume broker, is that we still speak face to face with underwriters about your circumstances. We look them in the eye and develop relationships to win their trust, just as we do with you as clients. It is a powerful communication tool which helps us get the best terms for you, and differentiates us as a quality specialist broker.
Finally, if you cut corners by not disclosing critical details, your upfront premium could be wrong and this in itself could be problematic if you have a claim, due to underinsurance. Your insurer may be within their rights to decline to pay all or part of the value because you didn’t disclose facts relevant to the risk.
Can you give some examples of these critical details that may affect a claim?
Not advising that you kept certain artworks stored in a basement could be one. Or perhaps failing to disclose that you only have security cameras pointing to the front of the house and not the back, or that you don’t have locks on the windows of your ground floor apartment.
What if your circumstances change?
Admin is tedious but necessary. Ensuring the correct individuals and locations are listed on your insurance policy helps avoid disappointment. On a good quality homeowner’s insurance policy, your art collections should be covered anywhere in the world including in transit, if securely and adequately packed. If you move home or purchase an additional property and move artwork there you need to inform your insurance company, because the security measures will be different. Sometimes, such changes are for the better and occasionally will improve your premium, for instance if you move away from a flood-prone area or transfer your most valuable painting from the ground floor of a townhouse to a second floor apartment in a gated and concierge-monitored block.
What happens to property insurance if a policy owner dies?
You may not be aware that property insurance does not operate like a life insurance policy; there is no automatic beneficiary and the policy does not automatically transfer to heirs upon death of the original owner. Making sure your heirs and trusted advisers are aware of the insurances you have in place, and potentially listing heirs as joint-assureds, is a sound idea for ensuring protection of homes and collections in the event of your death.
Let’s say Mrs Smith, a widow of ten years, passes away leaving her home and the art collection inside to her son. He holds on to the property as he is considering moving into it with his own family, but does not think to transfer the insurance policy into his own name. A few months later a burst pipe damages some of the furniture and art work. In this case the homeowners’ insurance would be unlikely to pay any restoration or replacement costs for the art work except possibly on an “ex-gratia” goodwill basis, as the new property owner is not listed on the contract of insurance.
What can you do if your (ex) spouse is the policy holder, and they refuse to disclose valuations?
If your (ex) spouse is refusing to add your new property to the insurance policy as above or will not provide a copy of the current valuation, there’s not much you can do without instructing your lawyer to pursue them specifically on this point. It is much simpler and no doubt significantly cheaper to get another valuation done and obtain your own policy for the items you are keeping within the divorce agreement.
What is the most unusual insurance claim you’ve ever encountered?
Thankfully fine art claims are rare because collectors generally take good care of their valued possessions, but we did once have a claim for artwork shipped with an obvious dent and tyre marks on the packaging, from having been run over, presumably by the shipper’s own van! The worst claim we have seen was a damaged old master canvas torn by a rolled up magazine flying at it, during a row. In the wider Private Client team I work with we have seen a Porsche roll into a pond when the handbrake was left off and a pheasant-rearing shed on a smallholding burn down, killing several thousand tiny occupants.
How have technological advancements affected the responsibility placed on the individual?
Previous generations relied on paper ledgers, hand-written receipts or even a handshake from their dealer as proof of purchase. In this day and age, lack of attention to records for valuable purchases and failure to ensure your evidence is backed up, just doesn’t cut it. Technology has streamlined our record-keeping via use of email, retailer’s databases and the advent of cloud storage, meaning that even storing files exclusively on a home computer is an unnecessary risk to take. Most valuers or appraisers will provide an e-copy inventory with photographs as well as a hard copy. It sounds obvious but you can even take your own pictures and store them digitally. If you receive paper receipts from a purchase, snap a picture of the invoice on your smart phone or scan it in using local facilities. Ensure your broker has a copy of your inventory and that you also have it saved somewhere secure, preferably in a secure online storage facility such as iCloud or Dropbox.
If you would like to know more about the issues covered in this article, Vardags offers a free consultation to qualifying individuals.
For high net worth and ultra high net worth individuals or their companies, our confidential enquiry line is staffed 24 hours. Call 020 7404 9390 today.