Comprehensive Household Policy
This is the most common type of policy for ordinary household contents. This covers everything in the home for specified risks, which are usually standard.
All Risks Policy
This is more appropriate if wider cover is required, for example to include the risk of accidental damage, and to include moveable items, such as jewellery, that may be removed from the house.
A Standard House Policy
This would include works of art and would probably be suitable for the average small house, with perhaps only a few antiques and works of art. Where a reasonable proportion of an owner’s contents are works of art, however, it is advisable to consult a Broker who specialises in Fine Art Insurance, as they will tend to be more flexible and are probably able to offer more competitive terms.
A Specialised Policy
The insurance of works of art often requires a special policy, both in terms of cover and cost. This allows sensible and adequate cover, whilst sticking to a premium that is within the owner’s budget.
Full Retail Replacement Value Policy
This is the usual criterion used for insurance valuations, and is the cost price of replacing items from the retail market. For works of art, this is usually higher than the auction value because it takes into account the retailer’s overheads and profit. This margin can vary widely according to the practice of the trade.
Agreed Value Policy
The sum paid in respect of each work of art in the event of a total loss, irrespective of the true market value, which has been agreed in advance with the insurer. No average applies to this type of arrangement. Obviously, a decision to insure at below market value gives savings in terms of premium.
First Loss Policy
An owner may insure items on a First Loss basis. This approach takes the view that any loss or damage is unlikely to affect all the works of art in a collection, and so the owner agrees a limit to the underwriter’s liability on any single claim to an agreed figure. This basis can apply to either a full replacement value policy or an agreed value policy. So if the works of art are valued at £200,000, and the value is not concentrated in one or two items but spread throughout the house, it may be considered unlikely that any damage would cause a claim greater than £50,000. The owner therefore negotiates on the basis of losses up to £50,000. This does mean that in the event of a catastrophe, whereby all works of art are lost, there will only be a payment of £50,000 for items worth £200,000. However, such an approach will reduce the premium.
This is the price at which items were bought. It is often the most appropriate cover for recently bought expensive items, where the cost is higher than re-sale or auction values. For these items, it is essential to be able to show receipts as proof of value.
This usually applies to large or valuable collections where the premium on a standard policy could be very large. The idea is to insure items against the most likely risks, and exclude the more unlikely ones. Most brokers and companies will consider this approach.
Given that a large number of claims are for relatively small sums, an owner may be prepared to underwrite any small losses, while wanting to maintain full insurance against a catastrophe. It is possible to make savings in premium by this method.
If you require an insurance valuation of your art, antiques, jewellery and general household contents, please contact Coram James for a free quotation. We work closely with leading insurance brokers and companies and can advise on a range of related issues.
Coram James Ltd