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business insurance

updated tue 30 apr 96


SANTERRE ROBERT on thu 18 apr 96

I'm looking for some advice on business insurance. I have a small
studio in my home and do all of my sales at fairs or consignment galleries.
I just purchased a policy from State Farm. Basically it covers equipment and
supplies and inventory (in process and finished work), and of course,
liability. In addition to the standard coverages I wanted a policy that
would cover work that was in transit or in a consignment gallery or at a fair.
My agent assured me that was what I was purchasing.

Unfortunately when I started reading the "fine print" ie., the "losses not
covered" section I noted some interesting exceptions to their coverage. For
example, losses due to "shifting of load, rough handling or poor packing" are
not covered. Losses due to "marring and scratching" are not covered. These
are all exclusions that pertain specifically to fine art. My agent says "these
are standard exclusions in the industry". Clearly the insurer
is trying to cover it's butt with language that gives lots of latitude to
exclude claims. When you drive through a monster chuckhole (I know you
southwest folks don't have to worry about this - what about a washout) and
break something, is that because the load shifted, you packed it poorly or
handled it roughly? When you carry the best sculpture you've ever made (and
just sold) through a doorway and the dog trips you up and you bump the door
casing and break off the hand and it smashes into 10,000 pieces on the
hardwood floor, is that marring or rough handling? If you have a fire and
your work is irretrievably damaged, is that marring? Only the claims
adjuster knows - and he's not telling until he has to. You see my dilemma.

My question is what are the rest of you all doing? Is there an insurance
company out there that will (for something less than a king's ransom) cover
fine arts losses - all losses, period? My policy with State Farm costs just
under $400 per year for $20,000 coverage with a $500 deductible.

I'd appreciate any informed comments on this issue.


jason barnes on fri 19 apr 96

Common sense and insurance don't necessarily go together.

The Insurance Companies are out to make money for their shareholders and their
policies reflect this. They will only provide limited cover based on strict
provisions, otherwise they are always paying out money and end up bankrupt.

Generally you can sum insurance up as disaster relief for a major event,rather
than for the day to day mundane accidents. If an insurance company was to
provide cover for every conceivable accident the cost of the cover would be so
prohibitive that no-one would find it worth-while to pay for it.

To provide cover for works in transit usually falls into the catergory of MARINE
INSURANCE,( at least it does in Aust., but it might be different in the U.S.)
and I can only suggest you contact a company that deals in this, or contact the
marine dept. of a major insurance company. Either way I think you will find that
there will be strict guidelines on what the policy will cover and what it won't.
Some policies only provide cover where the work is in transit with a
professional carrier,( so the insurer can recover through the carrier's
liability cover ).

Unless you are transporting works worth thousands of dollars the best option is
probably to "self insure", that simply means you asssume the responsibility for
the losses. If the works are worth more than you are prepared to assume the risk
for, it is probably easier to send the works with a professional carrier and the
risk then becomes theirs, ( as long as they don't get you to sign a waiver, or
specifically state in the agreement between you, that they don't accept any
responsibility ).

In closing I can only advise that if you are in any doubt seek professional
advice. Go to a good insurance company, broker or agent and ask for their
advice, these people deal with matters like this everyday.

I hope this helped somewhat, good luck.

Jason Barnes
Bendigo, Australia.