Fine Arts Risk

7 Critical Risks Facing Museums in the Fine Arts Industry

Fire and flood are some of a museum’s worries. Theft, loan gaps and vandalism top the list.
By: | July 9, 2018 • 5 min read

Preserving art, culture and history is a costly enterprise as many museum owners know. Even if an exhibit doesn’t boast a Rembrandt or Abraham Lincoln’s hat, it can still cost a pretty penny to keep the art and sculptures safe and insured.


There are a number of growing challenges museums and other galleries have to be on top of if they want to protect their collections from the obvious risks — flood and fire — as well as less-thought-of but equally important risks — loan gaps and transit.

1) Flood

Water damage can be a scary thing, especially for museums. Books, paintings, sketches, portraits and photographs — these products are extremely susceptible to water damage.

In 2017, Hurricane Harvey unleashed 50 inches of rain on unsuspecting Houston, leaving behind an estimated $75 billion in total damages thanks to flood waters. In addition to homes and businesses, Houston’s Theater District took a big hit. The Wharton County Historical Museum and 20th Century Technology Museum were nearly covered in muddy flood waters.

Mark Schulze, technical director of the 20th Century Technology Museum, told the LA Times, “Wharton County (who owns the museum building) says it will not pay for repairs to make the building habitable again, and conventional occupancy insurance almost never covers flood damage. Preliminary estimates for full remediation of the existing building are on par or exceed the cost of building an entirely new building.”

2) Vandalism

The Little Mermaid — Copenhagen, Denmark

It does not have to be a club-wielding, art-hating thug who takes down an invaluable work of art. Vandals come in all shapes and sizes, from protesters to disgruntled museum-goers, teenagers to those who think they’re being funny.

Paint, rocks, acid, knives and even lipstick have been known to cause damage to paintings and sculptures. Outdoor sculptures tend to take the brunt of defacement and cruelty as well.

One example, ‘The Little Mermaid,’ nestled on the beaches of Copenhagen, has been victim to not one, but two beheadings in the last 50 years. The first occurred in the mid-1960s as part of a political protest. The original head, which was sawed clean off, has never been found. The replacement head was decapitated in the 1990s, and though the culprits were never caught, they returned the mermaid’s head a month later anonymously.

3) Theft

An estimated 90 percent of all art theft involves inside personnel at the museum. Nearly $752.5 million worth of art was stolen in the U.S. in a five-year span. Forty percent of all art theft takes place in the UK, while 19 percent of theft occurs in the U.S.

The most vulnerable collections are stolen directly from private homes, making up 52 percent of all thefts. Only 10 percent of art theft occurs at art galleries and other similar facilities, like museums.

Though that’s a small percentage, museums should not skimp on their anti-theft security or insurance. Cultural property theft is the fourth largest crime category worldwide; it adds up to $3 billion to $5 billion each year.

4) Gaps in loan agreements

Museums and galleries often display artwork loaned out to them by private collectors or other museums. Sometimes, museums may sign an incoming loan agreement that asks them to take on more liability than their insurance policy covers, leading to gaps. If something were to happen, museums would be on the hook for damages.

Increasing temporary policy limits is one solution, though the trouble comes in when a museum’s curator doesn’t know there is a gap to begin with. Reviewing all insurance policies during any loan period is a priority when it comes to displaying a special exhibit.

5) Accumulation of values

It’s risky for museums to keep all their valuables in one location. If they split up their expensive artifacts and paintings, museums are spreading their risk and thinking proactively about preservation. That way, if one building or one hall suffers an incident, not all of the art is in the path of risk.

But many museums have massive values all in one building or even in one single gallery, which opens them to massive losses if something were to occur.

6) Fire

There’s no question that the items held in museums are vulnerable to burning. Even items held in fire proof cases are susceptible to smoke and ash damage. Art can’t be replaced, and restoration can be costly.

With volatile wildfire seasons growing and extending each year, museums need to keep an eye on both internal and external causes of fire risk.

Museums are starting to invest in other methods of fire-proofing outside installing smoke detectors and sprinklers inside the building. Getty Center in Los Angeles is a great example. It is a fortress of art, with travertine stone walls, a crushed stone roof and irrigation pipes used to saturate the earth in case of a fire outbreak.

7) Transit

Art is a privilege, not a right.

Museums and private art collectors generously loan out their Picasso’s, Van Gogh’s and Monet’s, because these precious pieces of art connect us to the history of the human race. These million-dollar pieces are sent back and forth all over the world just to be put on display.


But by allowing other galleries and museums to display the artwork they’ve purchased and kept safe, art collectors open up their possessions to the horrors of transportation risk.

Theft, accidents and weather top the list of transit issues, not to mention poorly packaged art bumping around in the back of a trailer or cargo plane. Those moving the precious material may not be adept in handling such goods, and human error can lead to some pretty catastrophic losses. Plus, the art needs to be warehoused in certain cases, and finding a storage unit that’s temperature controlled is imperative.

During transit, it is vital that careful evaluation, packing, shipping and documentation be used to prevent damage and loss. This is, by far, the riskiest activity art can undergo, so keeping track of every step of the process can help mitigate potential loss. &

Additional risks submitted by seven-time Power Broker® winner Mary Pontillo, national fine arts practice leader, SVP, Dewitt Stern — a Risk Strategies Company.

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.


Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”


Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.


“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at