24 November 2009

Art Market Recovery and Threat of Theft

Strong fine art auction sales results this fall season indicate the beginning of a recovery in the art market. This art market recovery, however, when combined with falling income levels and a rising unemployment rate, creates an environment of potential hazards for collectors and anyone else who owns items of value. Chief among these hazards is theft.

The recent theft of Andy Warhol paintings from a California residence is evidence of this very real threat. You can find more information about the stolen Warhol works here.

Even works by lesser-known artists are prone to theft. Within the past two weeks, a number of works by Peter Busa were stolen from his son’s home in Provincetown, Massachusettes. There is a link to an article about this theft here.

Major art theft happens here in the Midwest as well. CNBC’s American Greed highlighted a recent case in Saint Louis, Missouri. You can view the entire episode here.

The following steps are crucial to ensuring the safety of your collection:

1) Make sure your items are secure. Account for all of your valuable possessions and take security measures such as installing video cameras and security systems. Radio-frequency identification (RFID) is tool that not only helps you inventory your collection but can aid in recovery of any items which may be stolen. Companies such as Isis, Musechip, Smarttrack, and Avante offer various RFID options.

Keep track of everyone who comes into your home or any other location where you keep valuable possessions. This information will keep you knowledgeable and may be useful in the recovery of any stolen items.

If you have items in storage, understand the security policies and measures employed by companies to which you entrust your possessions. These possessions should be well documented, safely stored, properly valued, and checked regularly.

2) Get an appraisal of your valuable items. It is generally recommended that an appraisal of your valuable items of personal property be conducted every five years. In turbulent economic times, however, more frequent appraisals are a good idea.

Appraisals provide various benefits. First, you will have documentation of your items. The appraisal creates a list that can be used to check for loss, and it is essential to the recovery of any possessions that may be stolen.

Second, you will be able to ensure that you are properly covered in the unfortunate case of a loss. Depending on the terms of your policy, your possessions may not be insured at proper values. A significant number of insurance policies only cover the Actual Cash Value of items (a value is almost always lower than the Replacement Value) or only cover personal property to a certain limit. Once you have had an appraisal of your valuable possessions, consult your insurance agent to make sure that your collection is properly covered.

Collectors are often hesitant to have their possessions appraised when markets have declined. Delay, however, may result in insufficient coverage or insufficient documentation. These could lead to complications in reimbursement and / or recovery. Plus, once an appraisal is conducted, an update to that appraisal can be executed efficiently and at reasonable cost when markets have recovered.

3) Have a plan. Develop a system to inventory your collection regularly.

Utilize services that register and track valuable items, such as The Art Loss Register.

If you should find that any of your valuable possessions are missing, know who to contact and act quickly. Contact your local police and – if the value of the missing item(s) is high enough – the FBI. If you are one of their clients, specialized property insurers such as Chubb and AXA also have resources to help you in the case of a theft.

Know dealers and auctioneers who regularly sell the types of items you collect. Most of these sellers want nothing to do with stolen property, and they will appreciate your help in preventing their trafficking of stolen goods.

You have striven to assemble a collection of fine things. You are attached to them, emotionally and monetarily, and it is your responsibility to preserve them for the future. Take the proper measures to protect your endeavor.

© Justin Rogers 2009