Art News and Articles: FAR® Columnist
Galleries and Corporate Collections:
The Insurance Question
by Anayat Durrani
Not all art galleries and corporate collections are alike. Some insure their works while others do not. For an artist considering exhibiting their precious works in a gallery or corporate collection, inquiring whether their work will be insured against loss, theft, or damage is a must.
The John Pence Gallery is San Francisco's largest gallery and is in its 33rd year in downtown San Francisco. It is considered one of the premier academic realist galleries in the U.S., known for its strong stable of living academic realists, and also presents significant works from the late 19th and early 20th centuries. Owner John Pence told Fine Art Registry™ (FAR®) that they insure all works of art on the premises against loss by any means, including shipments.
"Why? Because they are in our custody and they belong to the artist in most cases," said Pence. "For owner directed galleries where the owner/director deals directly with and is a colleague and partner with the artist, it is the natural divide of proper responsibilities."
For nearly 25 years, the Caldwell Snyder Gallery has been exhibiting contemporary American, European, and Latin fine art. The gallery has approximately 20 shows a year in its exhibition space on Sutter Street in San Francisco and its landmark New York gallery on West Broadway in SoHo.
"We do insure our works, in case they get damaged, lost, or stolen," says Lisa Spinella, spokesperson for the gallery. "Artists works are protected under this insurance."
Kathy Zimmerer-McKelvie who serves as director of the University Art Gallery at California State University, Dominguez Hills, told FAR they insure all works of art that are on loan to the gallery and the artists are protected by the insurance. The gallery opened in 1978, and holds five exhibitions a year. It is considered to be one of the major exhibition spaces of the South Bay area in Los Angeles. She said most galleries and corporate collections do insure their work.
"Insurance protects the gallery from liability for loss of or damage to an expensive work of art,” explains Zimmerer-McKelvie. “Insurance protects the artist from loss or damage to a work of art that took hours or days to create and produce, and in many cases may be a sole source of income."
Zimmerer-McKelvie said that if the work of art is not insured, this leaves the artist unprotected. She advises that all artists should inquire about insurance coverage before loaning their work of art to a gallery or museum.
"All temporary exhibitions where the work of art is on loan should be insured, as the gallery is responsible for proper handling and care of the work of art. If it is part of a collection, it is up to the owner to insure the work of art as it is under their care."
Corporate Art Collections
Chase Manhattan Bank under David Rockefeller was one of the first corporations to start collecting art in 1960, according to Rosanne T. Martorella, professor of sociology at William Patterson University in Wayne, N.J., and author of books on corporate art. Today, Progressive Corp., has joined its ranks distinguishing itself as one of the largest corporate art galleries in the country with over 6,500 pieces in more than 430 locations. Progressive began its collection in 1974 with 30 pieces and today acquires 200-300 artworks each year for the collection. Many companies have begun adding corporate galleries, such as Bank of America, which in February 2007 opened their fourth gallery in the past three years in Wilmington, Delaware. The other galleries are in London, Charlotte, N.C., and San Francisco.
"We display bank-owned works in our galleries and, at times, travel some pieces from our collection to public galleries for community-outreach purposes," said Ernesto Anguilla, spokesperson for the Arts and Culture Sponsorships at Bank of America.
Professor Martorella characterized corporate collections as serving as good public relations and community outreach tools by these companies. And, Martorella said insurance is common in corporate galleries.
"However, small galleries cannot afford expensive insurance, so young artists probably would not get their true value," says Martorella. "Very expensive and inflated priced art is being sold off by corporations because they can't afford the insurance."
Mark L. Schussel, Vice President and Public Relations Manager For Chubb Group of Insurance Companies, said that art insurance tends to be quite inexpensive from a rate perspective. But he said over the years the values of art have risen significantly.
"Hence, it does become increasingly expensive to insure paintings that are hundreds of thousands or millions of dollars in value," said Schussel. "Corporations are more likely to sell art to take advantage of their investment gains versus not being able to afford art insurance."
Most galleries and corporate collections do insure work when it is in their care, explained Frank C. Lewis, Director of Exhibitions and Curator of the Collections at The Wriston Art Galleries at Lawrence University in Appleton, WI.
"Practically speaking a corporation probably thinks of its collections as an investment like any other and would not want to register a loss of assets," Lewis told FAR.
"If I were an artist I certainly would not exhibit my works in a commercial gallery that doesn't cover loss or damage."
Lewis said that many galleries have insurance and others are "self-insured" which means that they reimburse artists for loss or damages out of their own accounts. He said it’s chancy when it comes to a non-profit gallery.
"Many artists choose to show in these spaces even when insurance is not available as the exposure may be worth the risk," said Lewis.
Schussel said that galleries or corporations that own the works should consider insuring them and in fact many of them do.
"Obviously, there is not only potential for theft but damage to works caused by fire, smoke, water, wine — think exhibit opening receptions — and fingers and elbows," Schussel told FAR. “An artist who lends his works to a gallery for sale should make sure that the gallery provides the insurance on a wall-to-wall basis. Wall-to-wall coverage begins when the art is removed from its place of residence until it is returned, including during transportation. It typically is all-risk, which means just about every peril is covered except government seizure or nuclear hazard."
Lewis told FAR that it was ethically correct for artists to be protected, except perhaps in the case of not-for-profit or co-op galleries where the artist may have a direct stake or interest in the overall success of the gallery.
"Though many artists are loath to participate in "the business of art" they should nevertheless sign some kind of contract with any exhibition venue, which states clearly the responsibilities of both the artist and the gallery or corporation."
He said such contracts should state very clearly:
- Commissions on sales and time from sale of a work that payment is to be received.
- Which party pays for promotion (openings, announcements, etc.).
- Who is responsible for packing, shipping and receiving of artworks.
- Who covers any special installation costs.
- Length of loan.
- Any specific exclusions to the coverage of damage (in other words if a gallery or corporation does not cover loss or damage this should be clearly stated).
- Some commercial galleries may also have an exclusivity agreement with certain artists, which means that the artist can only sell their works through that particular gallery.
Lewis said it is a good idea for artists to look at a sample of a standard contract to see what they can and cannot live with in trade for exposure and exhibition opportunities.
"If I were an artist I certainly would not exhibit my works in a commercial gallery that doesn't cover loss or damage," said Lewis.
Part III will examine how insurance carriers deal with those items that are recovered after they are stolen
Part I: The Fine Art of Selecting Insurance Coverage for Fine Art and Collectibles
— Anayat Durrani | May 22, 2007
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