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August 13th, 2015

Posted In: fine art insurance

How Art Expenses Stack Up

First-time buyers are often shocked by how much it costs to own art


The hammer has gone down and the adrenaline is pumping – you have bought your first work of art. But when the excitement wears off, and the costs stack up, many inexperienced buyers can regret being over-zealous with the paddle.

The cost of managing an art collection can vary widely but could add up to between 1% and 5% of the value of the works annually – depending on whether you are talking about a single work of art or an entire collection, according to Annelien Bruins, founder of London-based Bruins Private Collections Consultancy. If you are making regular purchases and therefore have to take into account transaction costs and taxes, then costs can rise to 15% of the value of the collection, says Ms. Bruins.

In February this year, Lawrence Graff, multi-millionaire owner of London-based jewellers Graff Diamonds, reportedly bought Picasso’s 1963 painting Tete de Femme (Jacqueline) at Christie’s auction house for £8.1 million, double the highest estimate. This figure includes the buyer’s premium.

It can conservatively be estimated that Mr. Graff will incur costs of over £1 million in his first year of owning the painting, including transactions and taxes. As a seasoned collector, he will have been expecting this, but it can come as a nasty surprise to first-time buyers, according to Suzanne Gyorgy, head of art advisory at Citi Private Bank in New York.

She says: “Many people don’t understand the intricacies involved with collecting art. The auction house premiums, the framing, the storage, the upkeep. First-time buyers are often shocked.”

Transaction Costs

If you are buying at auction, the first thing to consider is the buyer’s premium. This is worked out on a sliding scale from between 12% to 25% of the hammer price depending on the value of the work.

The pricier the artwork, the smaller the fee as a proportion of the overall cost. At Christie’s or Sotheby’s in New York you can expect to pay an extra 25% on the value of purchases up to $50,000. Between $50,000 and $1 million, a 20% fee is charged, and there is a 12% charge on the portion of the price over $1 million.

Buyers in the U.S. and UK must also pay a sales tax on the premium. In the U.S. this is set at 8.375% and in the UK there is a VAT rate of 17.5%. Collectors in the European Union pay no sales tax but must pay an Artists’ Resale Right for up to 70 years after the artist’s death. This varies between 0.25% and 4% of the value of the work with a €12,500 cap.

The Artists’ Resale Right is set to be enforced in the UK after 2012, which Jussi Pylkkanen, president of Christie’s Europe, believes will seriously damage the number of sales in the UK. Buying art can be daunting, says Ms. Bruins: “Clients want more independent advice nowadays – if it is a private sale, some opt for a broker.” She says brokerage fees could cost around 10% of the sale price but that this has been more negotiable since the advent of the global recession.


Insurance costs can be less than 1% of the price of the art work, according to Nick Brett, underwriting director at AXA Art Insurance. AXA insures collections of up to £200 million. He says: “If you haven’t got specialist fine art insurance you could be unprotected from the moment you buy the work.”

Martin O’Neill
The premium percentage depends on many factors, including the size of the collection, its security and location, says Mr. Brett. Premiums also depend on the nature of the art. Porcelain might cost twice as much to insure as oil on canvas.

Home insurance premiums in Europe are currently at a low, as there have been few major catastrophes in the region to empty insurers’ coffers. “We are offering some competitive rates at the moment,” says Charles Dupplin, head of fine art and private clients at insurer Hiscox.


A good frame can easily cost £10,000, according to Ms. Gyorgy. She says: “A period frame from the same time as the artwork could be a valuable antique itself.”

If a work of art is damaged – Mr. Brett says he has a client whose maid put the handle of the vacuum cleaner through a canvas – restorations must be made. A complicated tear in the canvas could cost up to £30,000 to be restored with museum quality micro-weave, says Mr. Brett.

But it is not just human beings that are hazardous to art collections. Humidity and temperature fluctuations might ruin an ink work or render cracks in a sculpture.

The installation of environmental monitoring equipment might cost up to £1,000 a month for a large collection stretching over 30 square meters, says Chris Kneale, managing director of Martinspeed, a fine art services group in London.

Alternatively collections can be stored. “We charge £25 a week for a normal sized painting in a climate controlled room, but for a valuable work we would advise clients to buy the double case for £1,200 to keep it in first,” says Mr. Kneale.

Transport and Installation

The most common corner cut by new art owners is shipping and packing, according to Ms. Gyorgy. “I’ve heard of people who decided to quickly move a painting or sculpture in the back of a car and are surprised when the work gets damaged,” she says.

Professional packing prices depend on the work’s dimensions, but for a piece the size of Mr. Graff’s Picasso, which measured 90cm by 50cm, one can expect to pay £650 for a double case, a fully alarmed air-ride van and two men, according to Duncan Walker, fine art manager at Hedley’s Humpers, a London-based art transport provider.

For those in need of extra security on a door-to-door journey, a security car can be sent to follow the van. Fees run to £350 a day for a top asset protector like G7-Securitas Group.

If you are not sending a courier with the work, who would charge anything from £200 up, airport supervision is a good idea, says Ms. Bruins.

“For the transport company to gain supervisory access to the plane on your behalf, you could be looking at another £500,” she said.

If you buy abroad, import taxes must be paid on the journey home. In the UK, import tax is 5%, in France it is 5.5%. In Switzerland the tax jumps to 7.6% of the value of the work. In the U.S. there is no import tax but there is a processing fee.

Collection Management

For the really passionate collector there is a host of collection management software. “For a starting collector a couple of Excel sheets and photos would suffice,” says Ms Bruins. She adds that a photographer might charge £700 a day.

But for collections with over 10,000 pieces across a number of locations, you’ll need a way to keep track of what you own.

Collection management systems are available that can store historical information, purchase prices, valuation amounts as well as link to documents and photos.

UK-based Chaddleworth Software provides bespoke systems that can cost thousands of pounds to install, although off-the-shelf packages can be purchased for between £500 and £1,000 a year.

Serious collectors employ specialist staff, says Mr. Brett. A personal assistant or a member of the family office can oversee a small collection, but one with over 10,000 pieces would need a registrar or an administrative assistant to keep track of the paperwork. Salaries depend on experience but an in-house curator might cost around £40,000 a year, says Ms Bruins.


When it comes to reselling art, the standard rate for an art valuer varies between £750 and £1,500 a day, although discounts apply for a large collection. Auction houses may do it for free if the work is going to be sold through them. Catalogue illustrations can cost as much as £500 for a full cover page, according to Christie’s.

Sellers may be surprised to get stung for vendors fees, a few years after having stumped up a buyers premium. Sellers’ commissions at Christie’s ranges from 15% on the first £3,000 to a negligible fee on anything higher than £3m.

Ms. Loader-Wilkinson is a reporter on Financial News. She can be reached at

September 21st, 2010

Posted In: fine art insurance

Fine Art Collecting- A New Series Focuses on Risk Management
A 17th century London coffee house brewed up an international enterprise
Posted on 16 April 2010 | By Thomas Galbraith

This unusual story may not at first appear to be entirely relevant when considering the dark magic of insurance. Certainly many people need a cup of strong coffee before submitting themselves to an insurance analysis. But, other than that, what relevance is there between insurance and the art of coffee making…possibly, none.

(left): An illustration of Edward Lloyd’s coffee house, 1798, which served as a headquarters for marine underwriters. Fine Art Magazine

Lloyd’s of London World Headquarters today. Design by Richard Rogers

But consider this: coffee is pivotal to the story of how insurance came to be. Without coffee, and a place to drink it, the insurance industry may have taken a very different course. Lloyds of London, the original, official home of insurance, was first and foremost a coffee house, founded in 1688. At that time there were around 3,000 such coffee houses in London. So Lloyd’s must have been an entertaining and engaging-enough venue to have been frequented by ship owners, sailors and merchants – a rowdy bunch. Edward Lloyd’s coffee house provided a venue for weather reports, news from distant locales and discussion of business and, significantly, insurance agreements; all while slurping down cup after cup of coffee.

Santa Croce, Florence, Italy flood of 1966 destroyed 1000’s of historic artifacts

Lloyd’s moved, expanded and stopped selling coffee. It became the global center and catalyst for the modern insurance industry, as we know it today. There’s much more to Lloyd’s history, of course. Their coffee house origins are merely a prelude to how the company grew and consolidated into the fully-functioning industry it is today.

So how does it work, is it important and why should we have it? Most importantly, why should a collector of art or other fine things want to understand the workings of the insurance world?

The answer is simple: because it is an important part of your collection management strategy, protecting what you’ve spent years building. And, because your broker says so! Also, as with the English game of Cricket, it’s slightly more fun when you understand the rules.

St. Mark’s Square, Venice, Italy, floods each day due to sinking city and rising water levels, globally

Insurance works in its most basic form by pooling or transferring risk. A group of individuals, say art dealers, come together and all agree to pay a certain amount of money, premium, into a fund. Should one of the members suffer a loss or damage–like to a painting–they can then extract money from the fund for the amount of the loss. An individual taking a financial hit alone may very well bankrupt their business. When the loss is distributed among the members of the fund/group, not only can each individual afford to take on slightly larger risks, and therefore reap potential higher rewards, they also protect one another from financial ruin in the event of a large loss.

That is the core principal of insurance. Essentially, with some modifications, an insurance company extrapolates the principal to a much larger scale. Insurance loves the law of large numbers–the more people in the pool, the more predictable it becomes to measure likely losses and the more accurately annual premiums can be priced.

Portrait of a Flood, A. Sisley, Flood at Port-Marly, France (1876)

Insurance is everywhere and without it, very little could ever be done in the business world and art collecting, as you know, is often managed much like a business. I’m sure that if you’ve read this far, you have a story about insurance, perhaps involving an art fair, a shipping nightmare, or a consignment agreement gone wrong. All these are very direct examples of insurance at work, but what about the indirect examples? There is also workers’ compensation insurance so an art fair can be set up, a gallery staffed and art handlers hired; professional liability insurance for art advisors with overly litigious, “I’m-recording-this-for-my-lawyer” clients; and general liability insurance, in case a collector looses a toe to the unintentional and rapid descent of a large Kris Martin work!.

It is astonishing to consider how we are affected by insurance every day, in a wide variety of often invisible ways. In the coming articles, I will address exactly how important the role insurance is in our everyday lives, and particularly, how critical it is to the functioning of the art market. I also hope to offer some advice on how to handle your insurance proactively.

So at the very least, next time you’re making coffee for guests, you can talk about insurance in a most unusual and interesting way!

by Thomas Galbraith, Contributing Writer

Contact Thomas at if you have any questions you would like me to address in the coming articles.

Thomas Galbraith is Director of Fine Art for Bruce Gendelman Insurance Services. Galbraith has years of expertise in the art insurance marketplace. He previously worked as an art historian at the Art Loss Register, assisting in the recovery of stolen art, and as a collections specialist at Chartis Private Client Group. He most recently served as fine art expert for AXA Art Insurance in the U.S. and as part of the team that spearheaded the company’s Canadian operations. He currently serves on the board of APAA.

April 17th, 2010

Posted In: fine art insurance, Mailing list reports