Insuring Art in Cyprus and Internationally

Art has evolved into one of the most interesting asset classes internationally. And interestingly enough, it is one of the few assets that can be fully insured. In this Masterclass, Victor Ioannides, an international insurance broker and expert, discusses about how art insurance works, the role of art appraisers, and how to select a good insurance company.

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Art insurance is a specialized type of coverage designed to protect valuable artworks from risks such as theft, damage, or loss. Whether for private collectors, galleries, or museums, art insurance ensures that the financial value of the artwork is safeguarded in the event of an unforeseen incident. The policy typically covers a range of risks, including fire, vandalism, and accidental damage. However, obtaining adequate coverage requires a thorough understanding of the artwork’s value, which is often determined through professional appraisals.

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A critical step in insuring art is obtaining an accurate appraisal to determine the fair market value of the piece. Appraisals are conducted by certified professionals who consider various factors such as the artist's reputation, the artwork's historical significance, condition, and provenance. Appraisers also analyze market trends and previous sale prices of comparable works. Having a well-documented appraisal is essential not only for determining the insurance value but also for expediting claims in the event of loss or damage.

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Choosing a credible insurance firm is a crucial aspect of art insurance. Not all firms specialize in art coverage, so it is essential to seek out providers with a proven track record in handling fine art. Look for insurers who have expertise in underwriting art policies and partnerships with reputable appraisers. Research reviews, consult other art collectors or galleries, and verify the firm's financial stability before finalizing a policy. A trustworthy insurer will also offer tailored policies based on the specific needs of the collector or institution.

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In cases of stolen or damaged artwork, the insurance firm typically initiates a claims process that includes an assessment of the artwork’s insured value and the circumstances of the loss. Insurers may collaborate with law enforcement, art recovery specialists, and databases like the Art Loss Register to locate stolen pieces. For damaged works, insurers may work with restoration experts to determine if the artwork can be repaired. If the artwork cannot be recovered or restored, the insurer compensates the policyholder based on the appraised or insured value, minus any deductible.

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Insurance premiums for art policies vary depending on several factors, including the value of the artwork, its location, and the level of risk involved. For example, artworks displayed in high-risk areas or frequently transported may incur higher premiums. Premiums are typically calculated as a percentage of the total insured value, often ranging from 0.5% to 2% annually.

 

To manage costs, collectors can implement risk-reduction measures such as enhanced security systems, climate-controlled storage, or transit protection, which may result in lower premium rates. By balancing the cost of premiums with the peace of mind that insurance provides, art collectors and institutions can ensure the safety of their valuable investments.

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Victor Ioannides

 

The son and grandson of artists, Victor Ioannides earned a Bachelors in Accounting & Finance from the University of Warwick in 2002 and a Masters in Finance from Imperial University in 2004. After working in accounting at Chantry Vellacot and then in advisory at Price WaterhouseCoopers, Victor became director of Nicos Rossos Insurance in 2009. Since then, he has expanded the firm's insurance business in Cyprus and the United Kingdom, while at the same time developing several new insurance practises. ​

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