8 tips for lending art to cultural institutions

Help your high-net-worth clients achieve a tax benefit and increase the value of their possessions

Serious fine art collectors build their collections for very personal reasons. So why should they lend the possessions they cherish most to a museum or cultural institution?

A museum loan offers collectors a philanthropic opportunity to share a passion for works of art that are not otherwise available to the general public. Museum exhibition can enhance the provenance and value of privately owned work. Likewise, a museum may provide scholarly details about a collection. A loan to a museum can also result in a tax benefit for your client.

Many exhibitions are insured through highly selective programs, which provide insurance for art from international and domestic institutions. However, only certain insurance companies specialize in and encourage private loans to museums. Brokers can prepare themselves by seeking out knowledgeable insurance specialists to assist in the process and then advise their client if fine art insurance is necessary in addition to the museum’s policy.

The borrowing museum is responsible for all aspects of the loan, including “wall-to-wall” insurance. Brokers should consult with collectors before a loan is made to review location protection and security.

Here is a checklist for brokers to review with clients before an art loan is made. This kind of advice can make the broker invaluable to their clients:

1) Museum Accreditation Standards: These vary between museums. Likewise, standards of Canadian museums differ from foreign museums. To verify a museum’s credentials clients can check for accreditation with the Canadian Museums Association (www.museums.ca) or the International Council of Museums (http://icom.museum).

2) Fine Art Insurance: The borrowing museum is responsible for all aspects of the loan and associated costs, including insurance. The museum should provide your client with “wall-to-wall” insurance from the time the work is taken from their “wall,” during transit, throughout the exhibition, and until the work is returned to them. Ask your client if you can review the museum’s insurance policy to evaluate the financial strength of the insurance carrier.  Review whether your client should maintain their own insurance, in addition to the museum policy.

3) Appraisal: Recommend that your client have a current, independent appraisal to establish the proper value of the work at the time of the loan.  This also reflects the kind of coverage you secure for them during and after the loan.  Look for insurers that can assist you in identifying a relevant and qualified appraiser.

4) Title and Authenticity: If there are any concerns regarding authenticity or clear title to the fine art being loaned out, recommend that the client consult with a provenance researcher beforehand to ensure there are no issues.

5) Packing and Shipping: Recommend that your client consult with the museum conservator regarding protocols for packing and shipping.  Your client should obtain details about each leg of the trip and request a courier to accompany fragile items while in transit.  A condition report is a must before lending, following each transit, after the loan, and upon return to your client.

6) Museum Security: Your client can request a facility report from the museum registrar to evaluate the security and protection at the museum or any storage facility or venue where the work will be shown.

7) Display Conditions: Your client can request special display cases and specify display location for protection from the public.

8) Labeling and Identification: For privacy and future security issues, your client might consider anonymous acknowledgment of the loan versus attribution of ownership.

Marilyn Horrick is assistant vice president of Chubb Personal Insurance, Chubb Insurance Company of Canada. The views, information and content expressed herein are those of the author and do not necessarily represent the views of Chubb Insurance Company of Canada or of any of The Chubb Group of Insurance Companies. The information provided should not be relied on as legal advice or a definitive statement of the law in any jurisdiction. For such advice, you should consult your own legal counsel.

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