Defective title coverage grows in importance as art provenance faces scrutiny

Defective title coverage is becoming increasingly important in the art world, as closer attention is paid to pieces' provenance and litigation becomes increasingly common, according to Emma White, senior underwriter for fine art and specie at Liberty Specialty Markets (LSM).

“You could be a private collector, a museum, or a dealer, and we're seeing a lot of increased legislation around that [a piece's provenance] at the moment,” said White.

Speaking with The Insurer TV, White discussed how the evolving discourse around the origin of art pieces is making defective title coverage an increasingly important tool for art owners.

“There's been a huge amount of societal pressure now to make sure that people have that provenance, and especially if it's been displayed in a museum,” said White.

She added that in the event of disputes over a piece's origin, defective title coverage becomes valuable for collectors and institutions, as it helps cover legal expenses.

“With disputed provenance, you obviously need to defend the legal costs to ensure that you genuinely have the correct provenance on that piece,” said White.

LSM already includes defective title coverage in a lot of their policies, but White added the group is now focused on further developing the cover, as the likelihood for such debates increases.

“Defective title coverage is included in some of our policies, but we're trying to build that out to ensure it's really bespoke and catering to what these clients need at the moment, as some works are being called to be repatriated to their country of origin.”

“So, it's important for us that we work with our clients, rather than against them, to try and really create that product [i.e. defective title coverage], to make sure that they are covered if they need to do that,” said White.

Fine art and specie insurance benefiting from digital revolution

David Saillen, head of fine art and specie for Europe at Liberty Specialty Markets, also spoke with The Insurer TV about how technology is opening new opportunities in the business line.

“Technological advancement could influence our product breadth, if we think about blockchain, NFTs and cryptocurrencies,” said Saillen.

Saillen also saw the potential for technology to help insurers virtually evaluate an item, allowing them to write policies in a more efficient manner.

“With augmented reality, you could instantly look at the piece or the house, and information would come up telling you, ‘Okay, that roof seems like it hasn't been maintained for the last 20 years,’” concluded Saillen.

Saillen also saw the potential for these new technologies to bring a greater level of transparency to the famously opaque art world.

“It could help with smart contracts, which could bring a lot of transparency into the market. You can code fixed terms into smart contracts, such as the artist's resale rights,” explained Saillen.

Watch the full interview to hear more about: