Is Art Title Insurance Needed?

Daniel Grant writes a good column in the Huffington Post on art title insurance, and if it is needed and how the firms handling the insurance product are fairing. I have reported on art title insurance companies on the AW Blog in the past. Grant's article goes a bit deeper, and not only reports on the availability, but also on or if there is a need. It does not some of the major player in art insurance such as Chubb have expanded coverage for legal disputes.

The article is well worth reading and goes beyond the basics of the title insurance for art.

The major insurers of fine art collections have also found that their private collector clients see little reason to purchase title insurance policies. "We don't hear many requests" for title insurance, Christiane Fischer, chief executive officer of AXA Art Insurance, said, although she stated that there are instances involving inheritances, divorces and stolen artworks in circulation in which such coverage makes sense. Dorit Strauss, vice-president and worldwide specialty fine art manager at Chubb Insurance, also claimed that title insurance "makes sense, but no one wants to buy it." Collectors "expect dealers to have done their due diligence," which should solve the problem of ownership. She noted that Chubb considered adding a title insurance program years ago but found that "the only people who want title insurance are the people who have an impediment to the title of something in their possession, and they are looking to transfer the risk to someone else."

However, Strauss stated that Chubb has added to its all-risk Masterpiece fine arts coverage up to $100,000 in legal defense costs in the event of a challenge to the title of one or more works in a policyholder's collection. The insurer also refers policyholders to the Philadelphia-based Art Title Advisors, which for a fee of between $750 and $2,500 will research the history of ownership of a particular artwork, issuing a report that would clarify all known information about title. Jonathan Ziff, managing director of Art Title Advisors, noted that in a world in which art theft is the third largest area of crime dollar-wise (behind gun- and drug-running) art collectors should position themselves "in the event of a title challenge." However, he said, collectors are "largely oblivious to the potential problems and feel comfortable self-insuring. They feel pretty comfortable about their chances, believing that it's not going to happen to me." Ziff noted that there hasn't been a large number of collectors who have sought his company's services.

That comfort-level may be illusory, Shindell said, since "the art world operates in absolute secrecy. The buyer often doesn't know who the seller is and no one can be certain of title. There is always some degree of risk." Title insurance, he claimed, permits collectors to transfer that risk to a third party -- the insurance company.

Click HERE to read the full story.