Urban Art Association

Graffiti Insurance?, by Daniel Silk on Nov 20, 2007 10:46:46 GMT 1, www.lloyds.com/News_Centre/Features_from_Lloyds/Graffiti_art_worth_millions_but_can_it_be_insured_19112007.htm

Graffiti art worth millions – but can it be insured?
19 November 2007

Ten years ago it would have been enough to get you a detention in your GCSE art class, but now new art forms, particularly those categorised as graffiti, are taking auction houses by storm. And last month the biggest auction yet of original works by cult artist Banksy exceeded its estimated price by £200,000.

The famously unidentifiable artist has become a favourite with Hollywood A-listers, Brad Pitt and Angelina Jolie have reportedly spent more than £1m on his work. In April a mystery US buyer spent £288,000 on Space Girl and Bird at another auction in London after a fierce bidding war.

James MacNaughton, a member of the Facultative Solutions, Casualty Specialty and Financial lines team at Benfield, has over 20 years experience in the fine art insurance market and says the art world is undoubtedly evolving and collectors are embracing new ideas.

“Banksy’s art is fascinating and obviously has got a lot of supporters” he said. “People want to purchase his work and collectors want diverse art collections, like collecting the unusual, and are prepared to pay top prices,” MacNaughton adds.

“The art world is diversifying and branching out and we are always faced with new challenges. But [when it comes to insurance] we must remember the basics.”

Charles Dupplin, Chairman of the Art and Private Client division of Hiscox, says the evolving art world has given underwriters something to think about. “With contemporary art pieces there are a lot of interesting issues that arise. Some of the materials that go into making these works of art do not have a long life span and are incredibly fragile, so for insurers there are quite a few issues to address. How do you restore things that are damaged and potentially are not made anymore? These are problems that an art underwriter 25 years ago never would have had. That is part of the fun of our job.”

The problems insurers face when it comes to covering works from artists such as Banksy is often location.

MacNaughton says: “When an artist is doing a piece to sell, then the valuation is substantiated by supply and demand. If Banksy creates something that you determine as art work but it is in the public domain, where nobody owns it and it cannot be for sale, ie because it is part of public property – and thus there is no valuation – then there are all sorts of issues to deal with from an insurance perspective. Who is the owner from an insurable interest? And how do you determine the price of the piece? How would you protect it against malicious damage, for example?”

Publicly displayed art can be insured, however, in the event of vandalism. Dupplin explains: “The great difficulty is that if you want massive protection and put up gates and glass boxes then you cannot enjoy the thing anymore, but if you do not have any security at all you will find it difficult to get insurance cover. There are some sculptures that regularly get vandalised. Unfortunately the Churchill statue in Parliament Square is a case in point. Although this is state-owned and thus not insured, it would be very difficult to get insurance for if needed.”