Consult experts to avoid art shipping and art insurance disasters!

Are your valuable works of art insured during travel and are you using credible companies to transport your art? These questions  – and the importance of safe shipping and transport of art have been highlighted by a dispute in the UK.

I have come across a story titled “Momart dispute reveals hazards of shipping art” in The Art Newspaper, written by Cristina Ruiz. I believe this is of such importance that we need to share this on Insurancechat as well!

The Dispute

A British gallery is in dispute with the leading art shipping company Momart following the loss of a crate full of contemporary art at the Hong Kong art fair, ArtHK, in May.
Facts:

The gallery, which is based in London, hired Momart to deliver four crates of art sold at the fair to local collectors. In turn, Momart subcontracted the job to a company in Hong Kong, but did not outline the details in writing. The subcontractor picked up only three crates; the fourth crate has gone missing and has not been recovered. Momart declined to comment.

Like most specialist art shipping companies, Momart reserves the right to subcontract services without informing its clients (its standard terms of business state that it “may engage sub-contractors and/or other agents to perform the services or any part thereof on our behalf without notice to you”). Normally, specialist art shippers subcontract jobs to other specialised firms that have similar experience in handling art, and this is what Momart did in Hong Kong. However, when time is a factor, specialist firms do send art with commercial courier companies.

John Croom, an art insurance consultant for Ecclesiastical, served as group insurance director at Christie’s from 1994 to 2007. He tells the story of a $40m Picasso that ended up in a FedEx depot in the US.

The client who had bought the painting needed it delivered in a hurry, Croom says. “The shipping department of one of our European offices went to one of the recognised art shippers and said they needed to get this thing out immediately. But it was a Friday night and that shipper wasn’t doing one of their regular shipments to the States, so the shippers put the Picasso into the FedEx system.”

“I can remember our chief executive coming to see me… [François Pinault] had just bought Christie’s for some phenomenal amount of money and we didn’t want to have to say to him: ‘We’ve got a Picasso floating around in the FedEx system’,” Croom says. The work was tracked down to a FedEx depot in the US and safely collected by the auction house.

Some galleries are surprised and disappointed by the practice of using commercial couriers. One dealer who spoke to The Art Newspaper on condition of anonymity was involved in a dispute with an art shipping firm.

“To use an art shipper rather than hand a delivery directly to a commercial courier costs a lot more—to take a specific incident, approximately 60% more,” the dealer says. “Clients like the security of using an art shipper and we had assumed that there was an additional level of security in paying the extra for this. However, when something goes wrong, it is difficult to ascertain what extra service is attached to using an art shipper, thus justifying the extra cost.”

The main risk of transportation is that a work will often pass through a chain of handlers. Minimising the length of this chain minimises the risk, but increases the cost. For example, museums will often pay for curators or other staff members to travel with works. As dealers strive to cut costs, few are likely to pay for this level of service.

Supervision

“One of the riskiest times is moving items airside,” says Nick Brett of AXA Art. “They have to be cleared through customs, sometimes going into general cargo storage, before being loaded onto the plane. If your fine art carrier hasn’t got a representative airside then you have no control over how works are handled or by whom. If you do have someone airside, they’re there to supervise the movement of the items and hopefully some idiot won’t drive a forklift truck through your crate, which has happened at JFK [New York] more than once.”

Ultimately, dealers should ask their shippers to tell them exactly who will be handling their art at all times. “Dealers can be fairly lax,” says the loss adjuster Philip Austin. “They will appoint a well-known shipper and then just rely on the firm to get the item delivered without knowing exactly what is going on.”

Cost Recovery

Specialist art shippers are effectively immune from compensating clients for the value of lost art; instead, the firm is only liable for a few pence per kilo of the goods lost under the 2005 trading conditions of the British International Freight Association. To recover its costs, the London gallery in dispute with Momart will have to claim on its insurance, which will increase the cost of future premiums. Galleries’ insurance companies are usually prevented from recovering their own costs from shipping firms as galleries are often asked by shippers to have their insurers waive their rights of recourse. This condition is imposed on shippers by their own insurers, who would not otherwise provide insurance because the potential liability would be too great.

Conclusion and Advice

Consult the experts before you assume that each and everything is insured. Be involved in the consultation process with your insurer from the outset. Enquire as to what is covered, what the costs might be and where the responsibility and risk might be resting!

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