Make sure wealthy clients properly insure objets d’art and memorabilia

At a November Sotheby’s auction, a well-known U.S. CEO paid US$43.2 million for a first-edition printed copy of the U.S. Constitution.

It’s the the kind of purchase that prompts savvy clients to speak with an insurance broker about specialty coverage. This is just one example of the kinds of expensive items high net worth (HNW) people sometimes buy for their collections or as standalone pieces.

While the CEO isn’t an Aviva Canada client, this type of purchase is commonly seen by Joshua Elo, assistant vice president of high net worth at Aviva Canada.

“When you have a collectible, it’s something of value to you personally,” he said. “Everybody wants to protect their valued assets.”

And while that asset might be a document, a fine art piece or a rack of cellared Napa reds, it could also be an item of clothing.

Clothing typically falls under contents but certain items might also fall under the definition of collectibles or art, Elo explained, “Specialized clothing would be more like memorabilia.”

For instance, your HNW client’s Armani suits fall under property contents insurance. But if there’s an Armani suit previously worn by a famous actor, that could warrant special treatment because such items would be displayed, not worn.

These specialized clothing items may be insured under a policy with a sublimit, an increased blanket coverage or individual scheduling, said Elo.

While some items are showpieces, other collectibles may have more sentimental value for clients. That sentimentality can run deep with heirlooms — a great-grandmother’s ring or other items passed down over generations.

“We can’t replace the nostalgia tied to those pieces,” said Gisèle Kupsh, national ovation claims leader with Aviva Insurance. “But that’s an important part of the conversation we’ll have with the client.”

This subject should also be broached by brokers.

If a HNW client doesn’t offer information about their collectibles, brokers must ask the right questions to uncover what the client owns and make certain those items are insured at the correct values.

Likewise, the unique items wealthy clients acquire makes keeping receipts and documentation important.

“Clients can make a video recording. It helps document what they had because, often at the time of claim, the client has gone through a traumatic event and may not remember every individual item,” said Elo.

Plus, photographs can help if a client wants to have a stolen, damaged or destroyed piece replaced or recreated.

“It’s actually a good reason why unique items — especially jewellery — should be photographed and appraised,” said Kupsh. “If a claim results, you can then go to a jeweller with a photo and measurements, and they may be able to recreate [it].”

For example, one Aviva client owned a ring that was designed in Europe. “She was intent on replacing it and using that jeweller,” said Kupsh. Aviva had the ring appraised, reached out to the jeweller, who sourced the necessary gems, and the piece was recreated and shipped to the customer.

“It comes down to how creative we can be,” said Kupsh, “in sourcing the right experts and appraisers and working in tandem with our customers.”

Although Kupsh said many customers take a cash settlement in the event of a claim, “they like to know they have that flexibility to replace items at their leisure.”

Feature image by iStock.com/Attila Barabas