Insuring Art that Has Only Sentimental Value

We have all watched episodes of Antiques Roadshow in which the proud owner of an inherited painting stands dejected as the specialist tells her that there is no market for her beloved artwork and that it, therefore, has little to no value. Invariably, the owner will say to the expert, “Well, I cherish it, and it has tremendous sentimental value to me, and I’d never part with it.” The crestfallen owner walks away, erroneously thinking that because her piece has only sentimental value, there is no reason to seek casualty insurance for it.

To understand the art owner’s mistaken assumption, it is essential to grasp the typical approaches to value accepted by insurance companies when indemnifying policyholders for stolen, destroyed, or partially damaged personal property. Traditionally, fine art and other luxury assets are insured for “Retail Replacement Value”. Retail Replacement Value is defined as the cost necessary to replace an item of personal property with an equivalent object having a similar appearance, quality, condition, age, authorship and utility within the current retail market.

While the dejected Antiques Roadshow participant described at the beginning of this article might assume that since her painting has only a modest retail replacement value, that is not worth insuring, that assumption is incorrect. Even though a painting might only have non-marketable sentimental value, it still might have a significant insurable value. That insurable value is known in the world of personal property appraising for insurance purposes as “Owner Value.”

“Owner Value” is determined by the “Reproduction Cost” of an exact, new replica. Insurance based upon Reproduction Cost always requires a special rider, agreed-upon value or “floater” negotiated upfront with your carrier. Reproduction Cost of a sentimentally-treasured item can often be very substantial, entitling the insured to significant insurance proceeds in the event of a loss.

Needless to state, the procurement of a USPAP-qualified, professional appraiser is vital as a prerequisite for inducing an insurance company to pay substantial indemnification proceeds for an object that has only sentimental value. Updated appraisals based upon Reproduction Cost are also a good idea, although they need not be procured as frequently as, say, a painting by an artist whose works are steadily appreciating.

Before concluding this article, a word or two about frames are in order. While a work of art may not possess inherent fair market or retail replacement value, the frame may. Period frames can often carry values which far exceed that of the contained painting. Thus, when insuring the painting, be sure to consider the frame’s retail replacement value as well.

In conclusion, if you have art that has only sentimental or “Owner Value,” don’t conclude that your cherished piece is uninsurable. Consult your insurance company about procuring indemnification based upon Reproduction Cost, and above everything else, hire a professional personal property appraiser to determine that insurable value for both you and your insurer at the time of contracting.