Property Perils

Shielding Art From Wicked Weather

In response to a need to protect fine art and other collectibles from natural catastrophes, the art warehouse industry is on the rise. 
By: | October 15, 2015

When art attorney Scott Hodes set out to transfer some artwork from his residence in Chicago to a newly purchased townhouse in Miami, he was surprised to learn that a number of art insurers in South Florida did not offer fine art insurance during the hurricane season.


Hodes, senior counsel at Bryan Cave LLP, also learned that the building of warehouses in the Miami area custom designed for high-end objects such as fine art was a booming business.

Such structures allow collectors to store their valuables in well-protected art warehouses during the hurricane season and then have the warehouse move the artwork back to their residences from December 1 through June 1 when hurricanes generally are not a threat.

“The art warehouse business has really taken off in Southern Florida and elsewhere around the world,” said Hodes.

London-based Robert Read, head of art and private clients at Hiscox, agreed.

“I think art warehouses are an essential part of the fine art business, whether it’s a pre-exhibition consolidation or a place for private collectors or dealers to store things. People are increasingly using art warehouses as a good way to mitigate risk.

Scott Hodes, senior counsel, Bryan Cave LLP

Scott Hodes, senior counsel, Bryan Cave LLP

“Also, if you have pre-agreed capacity with some of these shippers and packers at these storage locations, [then] in the event of a disaster, you always have a storage spot and you’ve also got people who are going to allocate their resources to help you,” Read added.

Typically, the way people insure their items in an art warehouse is on an all-risk of physical loss or damage basis, he said.

“It’s a very broad form where everything is covered apart from a few exclusions. Then, of course, what underwriters and insurers have been looking at is that there is a vast range in the quality of things that are stored at the art warehouses,” he added.

“I think art warehouses are an essential part of the fine art business … .” Robert Read, head of art and private clients, Hiscox

“Chubb has been a consistent, year-round player in the South Florida market,” said Melissa Lalka, Whitehouse Station, N.J.-based fine art manager of Chubb Personal Insurance for Chubb Group of Insurance Cos.

“We come up with guidelines and parameters of risk protection so we don’t have to be a player that is in and out of the market when it comes to hurricanes.”

Chubb interacts with the growing number of warehouses in the South Florida market by having a number of specialists, including ones in South Florida, to help its customers there inspect warehouses, said Lalka.

Lalka added that Chubb keeps a database of preferred vendors so if their clients are going to be moving items into a storage facility, Chubb can be very nimble in advising which facilities are well protected.

“One of the questions carriers want answered, before agreeing to insure collections located on the coast of Florida, is if there is a disaster plan in place.” — Sandra Berlin, vice president, Willis

Sandra Berlin, Chicago-based vice president at Willis, said: “As a broker who specializes in insuring fine art collections, it is important to be able to effectively place coverage throughout the United States, including second and third homes in windstorm-vulnerable areas such as Florida.

“One of the questions carriers want answered, before agreeing to insure collections located on the coast of Florida, is if there is a disaster plan in place,” Berlin added.

“Depending on a collector’s location in relation to the flood zone, it can be challenging to obtain all-risk insurance with low deductibles and competitive costs.”

New York-based Jennifer Schipf, senior underwriter, fine art and specie at XL Catlin, said her company offers a full range of art insurance in South Florida, where they have been operating for 14 years.

Do Your Research

“The important thing for clients is that they really do their research to find a warehouse that not only specializes in fine art — and there are several wonderful ones in the South Florida area — but to also do their research among friends and peers to make sure they’re getting good recommendations and good feedback from people who have used the same warehouse they are considering,” Schipf said.

Jennifer Schipf, senior underwriter, fine art and specie, XL Catlin

Jennifer Schipf, senior underwriter, fine art and specie, XL Catlin

It’s also important to know what type of warehouse facility you are considering, Schipf said. “If it’s a fine art warehouse, they should have climate control to protect their art as much as possible,” she said.

It’s very important for collectors to understand that most art warehouses make sure they are not liable for loss of property of more than the required 60 cents per pound of the property they are holding, which only scratches the value of art these days, Schipf said.

“So it’s absolutely critical that if clients expect to have insurance coverage when their artwork is in the warehouse that they secure the coverage themselves,” Schipf added.

Another trend in the art market that is contributing to the growth of art warehouses is an increasing number of people who “buy and hold” art as an investment or who may not have the property or desire to house the art themselves, noted Read.

That often occurs with individuals “who use the big free port warehouses located in Luxemburg or Geneva, and there’s a big one in Singapore and in Monaco where art is held in tax-free limbo and sold within those warehouses,” Read said.

Museums Need Storage

Museums have increasingly become a big player in the art and collectibles storage business, said Linda Sandell, Huntington T. Block’s chief underwriting officer.


“As I have traveled to various museums around the country to speak with registrars and others responsible for protecting collections, a common theme is the lack of storage space available to house their permanent collections,” Sandell said.

“Most collections continue to grow and expand through acquisitions and donations but in many cases there is only enough exhibition space to display a fraction of the objects in the collection. The rest must remain in museum storage areas that are reaching or are at capacity.

“Increasingly, museums must consider leasing outside storage space for a portion of their permanent collection,” Sandell added. “As many specialty art storage warehouses are at or near capacity, finding temporary space, especially for a large number of objects, can be challenging.”

South Florida is a showcase for model art warehouses.

“Increasingly, museums must consider leasing outside storage space for a portion of their permanent collection.” — Linda Sandell, chief underwriting officer, Huntington T. Block

Fortress, which was built as a state-of-the-art, steel-and-concrete facility 32 years ago, and is the only South Florida art warehouse that has weathered hurricanes Andrew, Wilma and Katrina, also has warehouses in Boston and New York.

“We store art, furniture and valuables like collectibles,” said Vice President Kimberly Jones. “Our facility has been vetted and approved by most of the major insurers, including Chubb, XL Catlin and AIG.”

Fortress, which is an eight-story full-service warehouse, has storage spaces of all sizes, from about 12-square-foot units to those that are in thousands of square feet, said Jones.

“We are willing to customize spaces,” she added.

Fortress recently completed an expanded and renovated private viewing gallery as “we realized art pieces were getting larger,” Jones said. The viewing gallery is open during business hours Monday through Friday.

“When collectors store things with us, they have the option to purchase insurance through our policy for an additional charge,” Jones said. “Or they can have their own fine art coverage, which most of them do.”

A similar facility, Robo Vault, has also opened in South Florida. The facility has an area for storing wine and seven enclosed garages with a robotic arm that can store and retrieve exotic and antique automobiles.

Museo Vault, which opened for business in late 2008, is another state-of-the-art fine art and collectibles warehouse. The idea for Museo arose after the busy 2005 hurricane season, highlighted by Hurricane Katrina.


Museo Vault was designed to withstand even the 200 mph winds generated by the most powerful hurricanes, said business manager Vanessa Amor. Art is stored at least 35 feet off the ground to protect it from even the most aggressive storm surge.

“The insurance companies got together and created requirements for storing fine art in a facility such as ours,” said Amor. Museo Vault can also provide insurance if the client wants to buy it through them.

Amor stressed that Museo Vault was not a self-storage facility. “You can’t just walk in here to access your valuables,” she said. “Everything is very controlled. You have to have an escort with you at all times.”

Museo Vault has a very robust 24/7 security system. “You name the sensor,” said Amor, “we have it.”


Steve Yahn was a freelance writer based in New York. He had more than 40 years of financial reporting and editing experience. Comments can be directed to [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]