As the owner of a masterpiece, you are likely excited to get your painting on the wall where it will be viewed and cherished by guests for years to come. Don’t forget to insure your artwork.
Recently, a long-time collector of Michael Israel suffered an unfortunate house fire resulting in the destruction of their 2008 Eagle painting. Having the right insurance coverage and proper documentation of the artworks can make all the difference in receiving compensation for the loss.
Does your existing insurance cover art? Find out what coverage you have or if you need supplemental insurance. Standard homeowners’ and renters’ insurance policies have dollar limits on valuables like works of art and jewelry. You might need to purchase a fine art floater.
You will also want to make sure you have a certificate of authenticity. A registered COA with the artist’s studio and accompanying a copy of the bill of sale, appraisal, provenance (history of past ownership) and photographs is event better. A registered COA can also help prove ownership, authenticity, and value; and it also provides a layer of protection against theft! Registering protects lost or stolen artworks because our studio will contact the registered owner anytime someone tries to verify authenticity.
Make sure to get the art regularly appraised and keep the right records to substantiate their value. An appraisal can also let you know when you can increase or reduce insurance coverage.
The appraisal should be by a professional third party appraiser because neither our studio nor a seller, such as a charity or private individual, can provide “Arm’s Length” appraisal. We can provide our current list price for a similar artwork.
There are many kinds of art appraisals including current market value, current replacement value, estimated future value. Art values can change overnight. When having an artwork appraised, there are many considerations regarding the effects the appraised value may have on insurance claims, estate tax, charitable donations, when selling your art, or for distribution of your estate.
Before getting your artwork appraised you should consult with your tax advisor, your estate attorney and your insurance agent to help you determine the right type of appraisal to fit your needs.
If you have recently purchased or are planning to sell or donate your artwork, current and future market value may be important considerations. If you are planning to keep your artwork in your family, you may be more concerned with replacement value for insurance and future market value that might affect estate taxes.
A high appraisal might be advantageous when insuring or donating artwork to get the biggest return or deduction. Whereas a low appraisal might be advantageous if you recently purchased from a charity and wish to write-off your purchase. For charity purchases, only the portion of the purchase price that is above the appraised market value may be considered a donation for tax purposes. If the artwork is appraised higher than the purchase price, there is no deduction if you retain ownership. You should discuss these matters with a professional advisor before taking action.
We have seen appraisal higher than studio price for a performed artwork taking into consideration venue, production and other elements necessary to create an artwork in a live concert. Since few owners ever sell their Michael Israel artworks, and Michael Israel artworks are not readily available via third parties such as auction houses, galleries, etc., appraisers might not be able to to compare recent sales and thus be unable to make a fair market value appraisal.