Antique Dealers Insurance
In many people’s minds the subject of insurance goes “to the bottom of the pile”! After all, you can pay a great deal of money in premium, perhaps hundreds or even thousands of pounds, and all you get is a lot of paper, much of which is difficult to understand. Everyone can experience this euphoria, and that includes those who work in insurance and, as this article concerns them, those who deal in antiques. The fact is of course, that to be correctly insured for whatever reason, is vitally important; and those policy documents need to be carefully read and kept in a safe place.
At the basis of any non-life insurance policy is the Principle of Indemnity. That is to say that the insured should be placed in exactly the same position after a loss as they were before it. Wise men such as Edward Lloyd first thought of the idea of insurance in the late 17th century, meeting in London Coffee houses. Some of those who were better off would accept “bets” that a ship and cargo would, or wouldn’t arrive at it’s destination safely and intact. There was little about the Principal \of Indemnity in such dealings however, and it was only when a more formal group got together in the mid 1700’s, that Lloyds of London was born. Historically Lloyds have been an insurance market writing and accepting not only standard, but also “special” risks, tailoring the policy to meet the needs of the insured. It is in this context that Lloyds Underwriters have always been the best market for the insurance of antique dealers.
With the majority of insured risks ,whether they be personal such as household, or commercial, standard property, retail shops, offices, industry etc, the application of the Principal of indemnity in the event of a loss is fairly straightforward. Property insurable values can be easily assessed as can the retailers new stock, and so on. However, this is not the case with antique dealers insurance. Stock may have been in the dealer’s books for sometime having originally been bought at cost at a fraction of current value. And even if the items have been recently acquired, if the dealer is doing well, the purchase price may be totally irrelevant to the anticipated selling price. Thus the “basis of valuation” as it is called is a vital part of the dealer’s specialist insurance cover. This means that the dealer has the choice of different ways of covering the stock. He or she may opt to insure at cost price only which automatically includes the cost of restoration. Alternatively, insuring for cost plus a mark up of say 25% or 30% may be chosen if this is the likely profit margin. Then there are many cases where the stock has been bought at a very low price, whereas the hoped for selling price is far in excess of that figure. For this , there is an option to insure for selling price, less say 30%. Another feature of correctly written policies for antique dealers is that cover should include shoplifting and accidental damage.
It is only by ensuring that the above aspects of cover are dealt with satisfactorily, that the dealer can be properly indemnified. Such cover is only obtainable by specialist underwriters at Lloyds and not from the standard insurance company market.
There are of course many other aspects of antique dealers insurance cover which have to be considered. Due to the nature of the stock and the aspects already mentioned, it is important that stock books are kept as accurately as possible. We have encountered a number of cases where this is not done which makes things very difficult in the event of a claim. Another thing is the giving of notes of approbation. Again, there have been cases where items have been handed out on trust for sale by one dealer to another, and then gone missing where no agreement has been made in writing between the two parties. Similarly, antiques are often put out on loan to potential customers or handed over to restorers. All such matters should be covered by appropriate paper work to avoid problems if a claim arises. Adequate security is another important aspect. There should always be good mechanical protection in the form of high quality locks, etc and, if there is high value, particularly in urban areas, a good alarm may be required.
When arranging their insurance, the dealer should always ensure that they are fully covered for all aspects of their business, but not over insured, and this is where a responsible insurance broker is required. We are frequently faced with the strange situation when a dealer approaches us for a quotation for the business. Having taken all the necessary details and offered a quotation, we are sometimes baffled by the fact that their existing policy premium is either much higher or lower than our own. Further investigation usually shows that the quotation we are giving could , to all intents and purposes, be for an entirely different business than the one for which we have been given information. Only by going through the needs and wants very carefully can the matter be rectified.
Derek Mathews BA ACII
Chartered Insurance Practitioner
Hyde Park Insurance
