When thieves stole 7,000 rare insects, snakes and reptiles from a Philadelphia museum in August, they forced the closure of two entire floors of the museum while it tried to replenish its $40,000 collection. Museum officials called the theft of zebra tarantulas, rhinoceros roaches and other exotic creatures the “largest living insect heist” in history.
Earlier in the summer, two boys broke into a Chicago-area museum and smashed windows of a trolley car on display, causing more than $150,000 in damages. And just last week, a group of museum-goers made headlines around the world when they attempted to take a selfie near artwork by Francisco Goya and Salvador Dali and knocked the display to the ground, causing a not-yet-known amount of damage.
There are approximately 850 million visits each year to American museums, more than the attendance for all major league sporting events and theme parks combined, according to the American Alliance of Museums. Museum collections can be valued in millions of dollars. That combination of public exposure and high value creates a rare type of risk – and puts a premium on having the right insurance coverage.
“Museums can be subject to unique challenges when it comes to insuring valuable works of art, history, rarities and memorabilia,” said Andrea Prahl, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Corporate Headquarters. “It can be expensive to repair or replace items that are damaged, but the museum’s insurance policy can help to cover these costs.”
Museums need highly customized policies
A Commercial Property policy covers structural damage sustained at a museum caused by a catastrophic event such as fire or vandalism, Prahl said. Costs for these damages can quickly add up. Earlier this year a fire caused more than $100,000 in damage to the Gulfport History Museum in Florida.
General Liability (GL) Insurance covers many of the common risks — such as bodily injuries — that can happen to any type of organization open to the public.
However, specialized coverage needs for a museum require a tailored Commercial Inland Marine policy, Prahl mentioned. This policy can provide protection for an entire inventory of items including transit and off-premises coverage. The coverage can also reimburse for the high cost of damages or a theft claim. Types of items can range from coins and antiques, to historical memorabilia and fine art.
Damages caused by employees, vendors, customers and any member of the general public visiting a museum can also fall under a Commercial Inland Marine policy.
The terms and conditions offered by carriers as part of their Commercial Inland Marine policies for museums will vary, Prahl added. “You really want to read your policy closely and if there’s something you want to cover, work with your carrier to see if it’s possible,” she said.
Prahl added that a museum’s insurance coverage can be tailored to include items outside its collections, such as furniture and fixtures, and even special tools needed to repair or restore art.
“Whenever you have exposure to rare or historical items, you will have different risk profiles, so insurance policies may need to be tailored differently based on the museum’s needs,” Prahl said.
Security a necessity
What is widely considered the largest art heist in history, the 1990 theft of about $500 million in artwork from the Isabella Stewart Gardner Museum in Boston, has earned new attention this fall as an unsolved crime podcast called “Last Seen”. Also in the news recently: a Missouri museum’s $750,000 insurance settlement for the 2016 theft of Andy Warhol’s iconic Campbell’s Soup can prints.
To help protect against theft, most carriers will require that museums complete a comprehensive application that provides details about the museum’s processes and procedures, and additional security system details, Prahl said.
A high-quality security system with detailed and specific protocols can lower the risk of a museum’s items being stolen or damaged. Many larger museums have guards in place around the clock along with infrared and movement-detection systems, Prahl said. In addition, a carrier will generally order an insurance inspection, which can include an in-person security check.
Many insurers can require that warranties be included as part of a tailored Commercial Inland Marine policy for museums. A common warranty is confirming the existence of a central station alarm, which generally serves as a main security deterrent. “We may also ask for a copy of an alarm certificate so we can verify that a client has the type of alarm that we’re looking for,” Prahl said.
Insurers also may require a Stillage Warranty, a policy condition showing that stock must be stored a minimum of 12 inches above the floor to protect against water damage. Not fulfilling either of these warranties could void that tailored policy.
Cost and availability of coverage
There is no set formula for what the policy will cost the typical museum, because there are so many variables, Prahl said. Artworks may be appraised every one to two years because their value can fluctuate based on market trends and demands.
“You have items that could be worth thousands or millions,” Prahl said. “The appraisal helps to make sure the value is in line with the coverage on the policy.”
“The appraisal helps to make sure the total value is in line with the coverage on the policy.” — Andrea Prahl, Burns & Wilcox
The cost can vary greatly depending on location, size and security features of the museum, as well as the specific items being covered, Prahl said. The number of carriers that offer such policies are limited because of how customized they must be.
As with any coverage need, an insurance broker or agent must be consulted. Click here to forward this article to your insurance broker or agent to ask if you need this coverage, or share this with clients to start the conversation and ensure proper protection.
This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager. Burns & Wilcox works exclusively with retail insurance brokers and agents to assist clients like you with their specialty insurance needs. Ask your insurance broker or agent to review your Commercial Inland Marine coverage for museums or any other related policies to ensure you have proper protection.