High net worth (HNW) homeowners and collectors invest significant time, effort, and resources into acquiring cherished valuables, whether it’s rare artwork, antique furniture, jewellery, or vintage cars.
But with the Atlantic hurricane season upon us once more, these treasures are placed at massive risk.
Experts that spoke to Insurance Business highlighted two critical tools that insureds must be armed with before disasters strike: an inventory list and an emergency plan.
“I've seen hurricane seasons in and out for over a decade, and the same old lessons come up year after year,” said Rand Silver (pictured left), chief risk officer at Treadwell, a program underwriter specializing in fine art and collections.
“What I've seen is that most people, and not just high net-worth collectors, don't have an emergency plan. At a very basic level, everyone should have an emergency plan that includes documenting all their belongings.”
Diane Delaney (pictured on the right), executive director of the non-profit Private Risk Management Association (PRMA), said time is of the essence when helping clients formulate inventory lists and emergency plans.
“Educating our brokers and risk managers now, when they have time on their side, is critical,” she said. “When the clock is ticking, we see a lot of clients making mistakes about how and where to move or store their collections.”
According to Silver, an emergency plan should begin with the documentation of valuables and collections in a spreadsheet that's kept off site.
He recommends that clients walk through their home with a video camera, taping everything they have, and then storing the tape in a bank vault.
Delaney added that insureds should also have a thorough understanding of their policies and coverage for floods and other extreme weather events, to avoid delays and confusion during the claims process.
“After [Hurricane] Ian, there was a lot of confusion from homeowners filing the claims on what coverage they had and what part of their policies would be covering certain collectibles,” she told Insurance Business.
“Many didn’t realize that [collectibles] won't necessarily fall under homeowners or flood policies, but they would need an additional valuable articles policy to get coverage.”
Silver also recommended that collectors reach out to their broker, understand their coverages, make sure their items are insured to value.
He outlined the critical elements of an emergency plan for a collection:
“We once responded to an art claim where water was running down a painting in the client’s apartment, but the staff hadn’t removed it because they had been told nobody except the insured was allowed to touch the art,” Silver said.
Additionally, Delaney pointed out that an emergency plan for high net-worth insureds should include a list of emergencies likely to happen, and an action and communication plan for each emergency.
“A few examples of emergencies are fire, natural disaster, and weather-related events, such as flooding, hurricanes, and tornadoes,” she said. “The action plan needs to include steps necessary for the protection of property, such as the installation of storm shutters, testing and maintenance of generators and who will be responsible for the removal of valuable articles.”
Creating an inventory list is a very important but often overlooked step in disaster preparedness, according to Delaney. A list will be invaluable if the insured suffers a loss and needs to work with insurance professionals on a claim.
“Prioritize the list of items in your collections, so the most valuable pieces can be removed first. You don’t want to be in an emergency and trying to decide in that exact moment what needs to be removed,” Delaney advised.
For collectors, the inventory list should include actions needed to be taken on certain items in the event of an evacuation, as well as their up-to-date values.
“Every time art is handled or moved, that's the highest risk for damage,” Silver warned. “As long as the envelope of the home is secure, we recommend that clients have a plan to triage [collectibles] internally, including moving stuff away from windows and doors.
“But what I would say in general is that the simpler the emergency plan, the better.”
Temperature or climate control in the aftermath of a hurricane is key to preventing loss or damage to valuable items, Delaney noted.
“In the case of power outages in homes without a generator, battery-operated fans can be used to reduce the effects of heat and humidity on art and wine collections,” she said.
Silver also encouraged high net-worth owners and collectors to form relationships with key vendors.
“In advance of hurricane season, art handling vendors and conservators who would come in and help you after a loss are going to be busy,” he said. “When there’s a catastrophe happening, all the vendors are going to be stretched thin and you might not even be able to get them on the phone.”
Finally, both experts emphasized that emergency plans and inventor lists are critical beyond hurricane season. Valuables are vulnerable to fires, water damage, and other disasters all year round.
“I know this story of a giant art dealer that had a fire in his house,” Silver said. “We weren't insuring him, but I was on the train the next day reading the newspaper, and it had a quote from the fire department. The fire chief said, ‘We saved the biggest flat screen TV we’ve ever seen.’ And it gave me a chuckle.
“Because of course, if you don't have an emergency plan and there's no property manager telling [fire services], ‘you need to get the Picasso,’ they are going to grab the TV.”
Are you a broker helping clients prepare for hurricane season? Share some tips or advice you would give them below.
