When you have put valuable time and financial investment into a wine collection, you need to make provisions to have it protected. The best way is through adequate wine insurance. Unfortunately, collectors often overlook even basic protection of their valued wines.
Wine insurance is a relatively new face of the insurance industry in America.. It has formerly been lumped in personal property insurance, along with art and other valuables, as part of a collector’s homeowner’s insurance. Even then, insurance for wine for the collector has been limited to extremely large collections or very rare vintages.
Today, any size collection can be insured–and should be. By insuring your collection, you will first be giving it a value by having it appraised.
What Kind of Policy?
Determining what kind of policy you need and who to write your policy depends primarily on whether your collection is for consumption only or for consumption and investment. If your collection is small and used mainly for your personal drinking enjoyment, you can have your wine insured as a rider to a homeowner’s policy. Just make sure your policy has enough coverage to include the value of your wine.
Large collections should be insured under a valuable articles policy. This is how art, antiques, jewelry, and other collectibles are insured. Your collection can be insured for a blanket amount. However, if you have wines worth more than $10,000, you should look into insuring your wine bottle by bottle. This is especially important if you have rare or very expensive vintages.
Valuable articles policies cost around 40 to 80 cents per $100 worth of wine. For example, if you have a collection worth $150,000, you can insure it for as little as $600 annually. For a policy such as this, each bottle will need to be appraised by a certified wine appraiser. Your insurance company can help you find a qualified appraiser.
What Kind of Coverage?
Besides the kind of policy, you will need to consider the kind of coverage and the extent of protection for your wine.
You can protect your investment against theft or loss due to fires, floods, hurricanes, or tornadoes. Some policies cover accidental breakage.
Further, you can buy coverage for label damage as in a fire or flood or other natural disaster. For an extremely rare vintage, having the label intact increases the value of the wine. This is especially important for Mouton Rothschild labels, which are created by different artists for every vintage.
In some cases, you can insure against loss due to power outages or mechanical breakdowns that shut off your cooling and humidity systems. Moreover, some policies also cover loss in the quality of the wine due to excessive vibration, heat, light, or humidity. A policy such as that or one that covers everything will necessarily cost more.
One last consideration is whether you store your wine in more than one location. If you have wine in multiple locations, you will need coverage for each place where you house your wine. However, if one of those locations is a professional wine warehouse, the company should already have wine insurance in place, covering their liability. Ask to read their police declaration and be sure it covers the risks you are most concerned about (fire, flood, power outages, earthquake, etc.)
However, wine warehouses will not necessarily have coverage for that rare bottle you bought at auction. That is why some collectors will insure a case of rare wine themselves in addition to making sure the warehouse has insurance.
Policy Values and Deductibles
Most wine insurance policies are written with replacement value in mind. This means that the policy will pay for how much it would cost to replace the wine. This is based on current market value, not your original purchase price. Market value is determined by auction or retail activity. The replacement price can often be twice the retail selling price. (This is in sharp contract to replacement cost for personal property in a homeowner’s policy, which is based on original purchase price and current retail, with depreciation. This can bring the value of household goods down to half of their retail value.)
You will need to remember that your wine collection is valued at a specific point in time when the collection was inventoried and appraised. To keep your policy current, you may need to keep a running inventory of what comes in and out of your cellar. Keep this inventory in another location in a fire proof safe or in your safety deposit box at your bank.
Wine policies generally have lower deductibles than you would have for your homeowner’s policy. For example, most homeowner’s personal property policies have deductibles that start several hundred dollars and go into the thousands. If only a few bottles are lost, you would not benefit from the coverage. Some companies even offer wine policies with no deductible.
Wine insurance policies are sold by many insurance companies. The most prominent are Chubb Group, AIG, AXA Art Insurance, and Fireman’s Fund.
Thomson & Pratt in Lancaster, CA, offers an array of insurance services that wine collectors find beneficial. For example, they will survey insurance markets to find the appropriate coverage for your circumstances and secure coverage for you. They also can review your security arrangements for your home and your cellar and offer suggestions for improvement. This helps protect their investment in your insurance policy.
Fireman’s Fund offers blanket and itemized wine insurance under their Prestige Collections coverage. Itemized policies can also be combined with blanket plans. They also provide immediate coverage of new purchases to itemized collections, giving the policy holder 90 days to report the new acquisitions to their insurance agent. Fireman’s Fund also protects the collection anywhere in the world, even when it is being moved somewhere. This protects your wine from the moment it becomes your property and not just when it is in your hands.
With a little forethought, your precious wine collection can be insured, offering you peace of mind.