Insurance Art Appraisal
Insurance art appraisals establish the value required to replace a work of art in the event of loss or damage.
They ensure that insurance coverage reflects current market conditions and appropriate replacement costs.
Definition
Insurance appraisals are typically based on retail replacement value (RRV).
Retail replacement value is defined as the highest amount required to replace a work with another of comparable age, quality, origin, provenance and condition within a reasonable timeframe in the appropriate market.
This value may include gallery pricing, dealer margins, auction results as well as applicable commissions, taxes and transaction-related costs.
Methodology
The appraisal is based on a systematic analysis of the relevant art market, taking into account:
- Recent market results for comparable works
- The artist’s position within the international art market
- Quality and significance of the individual work
- Provenance, exhibition history and literature
- Condition of the work
All appraisals are prepared independently and in accordance with internationally recognized professional standards, including USPAP where applicable.
When an insurance appraisal is required
Insurance appraisals are typically required in the following contexts:
- Establishing or updating insurance coverage
- Collection inventories
- Periodic review of insured values
- Claims in the event of loss or damage
A professionally prepared insurance appraisal ensures that insured values accurately reflect replacement costs and reduces the risk of under- or over-insurance.