Is Restoration cover built into your Insurance policy?

Alexandra Richards, Private Clients Development Executive at Bruce Stevenson Insurance Brokers looks at why it is so important to ensure that your collection, whether private or corporate, has restoration cover built into the insurance policy.

Every insurance claim is different and each one has its own story to tell and can often be emotional.  Like other possessions, be it musical instruments, paintings or books, they usually have a sentimental value in addition to their market value.

Under a specialist collections insurance policy, the amount settled for an item that is partially damaged (be it through fire, water damage or simply by an accident) is not only the cost of restoring the item, but any subsequent drop in value.  However, the total amount to be settled must not exceed the value of the item, or else it is considered by underwriters as a ‘total loss’ whereupon they settle the full value of the loss.

The purpose of insurance is to put you back in the same position as you were immediately prior to the loss.

Restoration Cover Insurance Policy Bruce Stevenson

Recently we dealt with a case where a piece of art was badly damaged due to a fire.

A fire occurred in the ground floor reception room of a private home and although it was apparent that the drawing room door was closed, it was clear that a large volume of dense smoke permeated throughout most of the property.

Forensic testing confirmed that the cause of the fire was as a result of an exposed bulb of a halogen uplighter placed in close proximity to a combustible curtain fabric. The pattern of burning clearly showed that the seat of the fire was at the front of the drawing room.

There was fire and smoke damage to a number of ‘collection’ items including a watercolour that suffered extensive heat and smoke damage but was protected by glass.  Restoration work commenced to clean the surface and varnish to remove smoke deposits. Not only was the work physically damaged, but a smoke odour lingered. The reverse of the canvas was also cleaned, combined with Ozone treatment, good air circulation and filtration which resolved the problem of the smell.

In accordance with terms of the policy, costs were met for restoration plus any subsequent loss in value.  As evidence of the treated areas were visible under ultra –violet light, the insurer sought the opinion from two independent galleries who had dealings with the Artist and works of this nature, together with an auction house to ascertain the diminution of value, in percentage terms.

The watercolour was insured on an agreed value basis and it was confirmed that the value had depreciated by 55%. The claim was therefore settled for restoration and depreciation costs with the insured retaining the work. The insured was satisfied that the work was salvageable and not a total loss. The policy schedule was then amended to reflect the revised agreed value.

Accidental damage is the most frequent cause of collection claims so it pays to be prepared and work with the principle that prevention is better than cure.

For any further information please contact [email protected] or call 0131 553 2293

Whisky Galore

This article recently appeared in the Scotsman 200.

Whisky Galore….

The remake of Whisky Galore is set to put the spirits industry firmly in the spotlight this year but for those with their nose on the malt money, it’s the leap in the value of collectibles malts that’s paying real dividends.

Prices for the top 1000 rarest single malt Scotch releases have risen by more than 175% since 2008 based on auction figures, according to Whisky Highland. Last year Bonhams sold the most expensive bottle of malt ever sold at auction in Scotland – a bottle of Glenfiddich going for £68,500 smashing the £25-£35k estimate. Even at the more conservative end of the market, a rare bottle can fetch many thousands of pounds.

As the valuation of rare whiskies rises, it’s important to consider insuring collections from fire, flood and whisky theft which is a very real threat for private whisky collectors, sellers and producers. Islay distillery Kilchoman had more than 250 bottles of a private single cask bottling worth over £38,000 stolen in March this year. Last year saw thieves steal over £14,000 worth of whisky from Perth and Kinross Distillery Tullibardine and a whisky enthusiast’s prized collection was stolen from his home in Renfrewshire.

Many might assume that a whisky collection will be covered under their general home contents policy. However, most household policies have low single article limits so they will not pay out on any claim for a single item that is worth more than on average £2,000 in value. Even then, the cover might not recognise the insurance needs that a private collection warrants.

It’s imperative that whisky enthusiasts get their collection valued by a specialist and that the stock inventory is kept up to date. This will help establish the amount that the collection needs to be insured for. Depending on the value of any individual bottle, the valuation may be needed in the event of loss or damage to quickly substantiate and evidence the value of those bottles that may be subject to a claim. This should enable a quick, un-quibbled settlement.

To ensure the necessary protection and preservation of a whisky or indeed wine, clocks, stamps or artwork collection, storage is essential. Keep bottles of whisky out of the sunlight and in a cool and dry place, up off the floor. Direct sunlight can result in the whisky lightening in colour and the labels fading. Often people store their whisky in a basement or cellar but these can be prone to flooding so it’s important that the collection is raised from floor level. If the labels come off the bottles (the most important single element of identification of a whisky bottle), the value is diminished.

The correct insurance provision will cover the cost to restore the label, plus any subsequent depreciation in value of the bottle(s) of whisky would be met. One insurer dealt with a claim where wine labels (although the same could apply to whisky) were eaten by snails that had crawled into the cellar. A standard household policy would not have paid out, since technically the product, the wine, wasn’t damaged.

If buying from auction or direct from a distillery, the whisky is automatically insured for up to 60 or 90 days from the point of purchase as long as the insurance broker is notified within that timescale and the appropriate additional premium is charged.

The policy wording is paramount here and there will be exclusions. It’s important that collectors and whisky enthusiasts ensure that specialist cover is employed for their collections. Remember that typically for whisky or wine collections, as soon as a bottle is opened, cover in respect of that bottle ceases so if it’s a rare one, best to keep it off the nose to keep on the money!