Art Insurance: Clean as a Rockwell

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“Defective art” is buzzing up the art scene, but not in that postmodern kind of way. This time, it’s not so cool. For instance, director Steven Spielberg recently dealt with defective title when he discovered that his Norman Rockwell painting, the Russian Schoolroom, had been stolen from a Missouri gallery 16 years earlier. Spielberg has since returned the painting to the FBI, where it sits in custody battle between two other alleged owners. Casino magnate Steve Wynn, on the other hand, accidentally poked the tip of his elbow into his 75-year old Picasso painting, La Reve, leaving the work in defective condition. Wynn had originally struck a deal to sell the painting for a record sum, but is now in court disputing issues concerning loss of value.

In these examples, “defective art” would have been more “cool” and less burdensome had it been backed by sound insurance. For instance, had Spielberg obtained title insurance, he would have been reimbursed for the full cost of the painting, as well as any legal fees expended on defending ownership. Moreover, he may have avoided purchasing the work of art had the insurance company conducted a thorough title check. And while Wynn originally possessed insurance, there is debate as to the extent of coverage. To avoid situations like these, an art collector or investor should seriously consider insurance, and if so, ensure the policy effectively transfers various types of risks to the insurance company. Insurance companies whose names are frequently associated with art insurance include Axa Art, Aris, Willis Fine Art Jewelry & Specie, McGowan & Company, and Travelers Inland.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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