Art collectors consider fraud and provenance concerns as the top risk to their collections, beating out other issues like damage during travel, natural deterioration, and environmental disasters, according to a recently published wealth report published by insurance company Chubb.
The report surveyed 800 North American collectors about their assets, what they collect, and what worries them the most. While most of the respondents said they collected fine art, jewelry, cars, wine, and other valuables they were passionate about, more than one third (around 38 percent) said they collected those items as investments.
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Concerns about those investments retaining or increasing their value is likely a big reason why 87 percent of the collectors who responded to Chubb’s survey said they were the most worried about the risk of art fraud, just beating out damage during travel and transportation (at 86 percent of those surveyed).
“If you’re making it as an investment, one of your biggest risks you’re perceiving is ‘Did I make the right call here? And is it a safe way to park my money in an investment?’” Ana Robic, Chubb’s Division President for its North American Personal Risk Services, told ARTnews.
Recent examples of high-profile art fraud, thefts, and repatriations include the seizure of the headless bronze statue at the Cleveland Museum of Art, the stolen statue Wounded Indian at the Walter P. Chrysler Museum; the Metropolitan Museum of Art returning 16 artifacts to Cambodia and Thailand, the Vancouver Art Gallery’s exhibition on ten fake Group of Seven oil sketches, the ongoing scandal at the British Museum over its 2,000 missing items, and the seizure of more than 1,000 pieces falsely attributed to Anishinaabe artist Norval Morrisseau.
While Chubb’s insurance policies may pay for associated legal fees and defense of title, its policies do not offer protection for fraud itself. If a work is discovered to be fake or stolen and subject to repatriation, that loss becomes solely the responsibility of the art collectors.
A notable case of this are 25 works attributed to Jean-Michel Basquiat that were seized by the FBI in June 2022 while they were on view at Orlando Museum of Art after a multi-year investigation into their authenticity. The owners of the paintings and the museum’s then director and chief executive, Aaron De Groft, insisted the works were authentic paintings by Basquiat, but a former auctioneer plead guilty last year to making and selling the fake works.
In August 2022, the museum also filed a lawsuit against Groft, who resigned shortly after the FBI, and the group of owners, claiming “significant financial and reputation damage” due to hosting the show. The legal fees for the museum could reach $600,000, and the trial is scheduled to take place in August 2025.
To prevent such a headline-grabbing investment loss from fraud, Robic said collectors are strongly advised on the importance of buying from reputable sources, requesting provenance documentation, and consulting third-party experts like forensic conservators. “We’re aggressively trying to prevent this from happening in the first place,” she said.
In reality, damage to artworks from travel and transport through loans to museums or consignments to auction houses or galleries are much more likely to happen and prompt insurance claims. Robic said that mundane incidents—like glasses of red wine spilling or a knife or a fork going into a painting during a cocktail party—are common reasons for restoration and repair claims.
Heavy and fragile art that is hung incorrectly can also result in “significant hardship” if walls are not reinforced or instructions from artists aren’t correctly followed. The Chubb report recommended clients bring in a professional art handler every 10 years or so to check installation hardware.
“It’s shocking how many folks still don’t heed all of that advice properly,” Robic said. “And then you have losses just from mis-hanging or degradation of hanging over time, where it falls after a year or two because it was not inspected and monitored.”
Robic said a big misconception is when collectors should contact an insurance agent about various policies and advice. In her experience, often collectors do so after being surrounded by those with much larger collections.
“We ensure all kinds of of collections and protecting them is valuable and important,” Robic said. “Even at five pieces of art. It doesn’t have to be a massive collection that you’ve dedicated a wing of your home to.”
Source: artnews.com