Insuring the irreplaceable

If you are recommending insurance, don’t forget to ask about clients’ irreplaceable belongings.

The markets haven’t been the greatest for investible assets, but the value of fine art and jewelry continues to appreciate, meaning that wealthy clients ought to think about protecting those assets from mishaps, said Martin Hartley, chief operating officer of Privilege Underwriters Inc.

“There is growing evidence that people are viewing the purchase of art or collectibles as an investment,” he said. “It’s a great deal of diversification from the stock market and bonds — and it’s fun, too.”

Through insurance brokers, the carrier has teamed up with family offices and wealth managers to provide consulting regarding coverage on higher-end property for the wealthiest clients.

There are typically estate-planning and insurance implications for inherited works of art, Mr. Hartley said.

Indeed, business is picking up. Privilege ended last year with $121 million of in-force premiums, and it expects to increase that figure to $180 million by the end of 2012. Privilege insures about 17,000 affluent families in the United States.

The world of property coverage for the wealthy can be rife with misunderstanding.

Mr. Hartley pointed out that — contrary to what many people might believe — a typical homeowner’s insurance policy won’t cover all the valuables inside.

Rather, your client’s inherited Mondrian painting will need its own policy.

Should the work require repair or restoration due to an accident — for instance, the way casino mogul Steve Wynn needed to restore Picasso’s “Le Rêve” after accidentally putting an elbow through the canvas in 2006 — a specific fine-art policy could cover both the restoration and the decrease in value, Mr. Hartley explained.