July 27, 2005

 

Insurance Information Notice 2006-1

 

Property Coverage for Fine Arts

 

Due to the increased number of fine art claims and discrepancies in values, the Office of Risk Management (ORM) has established the valuation of fine art in the event of a claim for loss or damage. Fine art includes museum exhibits, antiques, and objects of art of every nature and description. ORM provides coverage on all property in which the State of Louisiana has at least a partial ownership interest. We also cover property of others in the care, custody or control of any Louisiana State agency, including while in transit to and from and while located at the state agency or exhibit arena, unless other evidence of insurance is provided before the State takes custody of the property.

 

The Blanket Property Policy includes a special form that addresses the valuation of fine art claims at the time of loss. It states, in the event of loss or damage, all covered property shall be valued as follows:

 

          State-Owned Fine Art

 

Property owned by the Louisiana State agency shall be valued at the amounts indicated on the books and records of the owner-agency and shall be the agreed value of each item at the time of loss or damage.

 

In the event of a claim, the most recently-dated documented list of the items and their values must be submitted to the ORM Claims Adjuster for review. The total of these values should correspond with the total value reported to ORM on the most current Property Exposure Report returned from your agency (see example attached). ORM also strongly recommends that fine arts be appraised by a qualified appraiser at least every 3 years to maintain an accurate appreciated value. It is the responsibility of the agency to maintain all documents, which can be forwarded to ORM upon request or in the event of a claim.

 

          Fine Art On Loan to the State (Non-State-Owned)

 

Property of others on loan to the Louisiana State agency, for which the agency has agreed to insure or for which the agency may be liable, shall be valued at the amounts agreed upon by the agency and the owners prior to the loss. In the absence of a statement of values, ORM shall pay the Actual Cash Value (ACV) of the property at the time of loss or damage and in no event for an amount greater than that specified in the policy. The loss or damage shall be an exact value or estimated according to such ACV (with proper deduction for depreciation) and shall in no event exceed what it would cost to repair or replace the item with material of like kind and quality.

 

It is recommended that the agency receive a signed and dated statement of values per item from the owners before accepting the loan. If this statement is not executed and there is a loss, the agency could be held responsible for the difference between the Actual Cash Value and the true value of the items. It is also recommended that the statement be reviewed and updated annually if it is a long-term loan.

 

ORM mails each agency a Schedule of Property Values report twice a year (see example attached). Each agency is required to review and update their total fine art values per building on that report. This total on the Schedule of Property Values is the only record ORM maintains; it is necessary for each agency to keep a complete, up-to-date list of all items included in their fine art total.

 

If you have any questions concerning fine art claims, please contact Michael Kennedy at (225) 342-8436. If you have questions concerning the reporting of fine art values and insurance coverage, please contact Amanda Arthur at (225) 342-8469.

 

JST/mah