Protecting your bottled-up investments
01 Apr 2014
Protecting your bottled-up investments - The importance of wine insurance
By John Sims - Head of Private Client Group - AIG Insurance
Wine enthusiasts know the rewards of owning a collection: nurturing a bottle for years, anticipating its peak and, at last, savoring the fruit of the vine. Unfortunately, some bottles won't make it that far. Fragile bottles can break. Basement cellars can flood. Refrigeration systems can malfunction. Although it may be easy to overlook, maintaining adequate insurance coverage is a key component to protect a wine collection.
Even the savviest collectors can make mistakes when it comes to insuring their wine. Here are a few common oversights that can be easily avoided:
- Assuming your collection is protected under your household policy.In fact, most home owner's policies specifically exclude cover for perishables and fragile goods, such as wine.
- Storing your collection in the garage.Gas and exhaust fumes can permeate the cork, causing spoilage.
- Keeping an outdated inventory.Inaccurate inventories can leave the collection open to theft and undervaluation.
- Not connecting the wine cellar to temperature and moisture alarms.Catching dramatic changes to the cellar conditions can avert a major loss.
Despite your best efforts, power cuts, breakage during shipping and other unforeseen circumstances still can occur. For example:
- A truck transporting wine purchased at auction hit a patch of ice and flipped over, smashing most of the bottles inside.
Check to ensure that newly acquired bottles and/or those in transit are covered.
- An avid wine collector was renovating the expansive cellar in his home. During an on-site vulnerability assessment by his insurer, it was discovered that a mechanism hooked up to the central air conditioning unit was being used to regulate the cellar temperature. If this piece broke, a replacement could take weeks to locate and install-a delay that could potentially ruin his collection.
Only a few select insurers have collection management experts who can spot these unique vulnerabilities and deliver meaningful solutions that may prevent loss.
- Multiple pipes froze in an upstairs bathroom. Pressure from water trying to push ice through the pipes caused them to burst, flooding the home-including the wine cellar. A significant portion of the wine collection was lost.
A water leak detector hooked to a central alarm system could have prevented this loss from occurring. These systems monitor water flow continuously. If leaks occur in water pipes, plumbing fixtures or water-using appliances, they shut off the water supply automatically and activate an alarm.
Advice for collectors
When it comes to wine, the easiest way to insure a collection is via a "blanket" policy with one overall limit. Blanket coverage is the best choice for the vast majority of collectors-especially if they intend to drink what they acquire over time. This option affords the flexibility to add and remove bottles without having to notify the broker or the insurer (unless the value of an individual bottle exceeds the limits under the policy).
Alternatively, if they own high-priced bottles and/or intend to hold onto their collection, a scheduled policy is a better option. With this policy, each bottle is listed and insured individually.
When evaluating the right insurer, keep in mind that preserving the collection takes more than knowing year and vintage. Look for one that not only can compensate you financially in the event of a loss, but also has the resources to provide superior cover and services to help minimize the likelihood of damage or spoilage.