Many fine wine collections are extremely rare and are highly sought after by investors, with some outperforming traditional stocks and shares. In fact, the average value of a fine wine collection in the US is now between $50,000 and $100,000.
And yet, less than 10% of those collections had insurance. This oversight is surprising when you consider the fragility of these assets, and the nuances of taking proper care of them to minimise the risk of damage and maintain long-term value.
Even for those with insurance, the risk of underinsurance is high when it comes to perishable assets like fine wine. Whether it’s an investment or for personal consumption, the worst of all worlds is to find you can’t recover the full value of a collection should something go wrong.
Taking the right steps
It’s not uncommon for collectors to assume that a standard home and contents policy will adequately cover their wine collection, but this is not the case. The factors most likely to cause damage to collections, such as temperature control or storage problems, are not usually included in home insurance policies. Consequently, these policies won’t give the high level of protection that is needed to maintain a wine collection safely.
It’s also important to acknowledge that no two wine collections are the same, so taking out a customised policy is definitely the way to go. For example, bottle-by-bottle coverage is perfect if just one particularly rare vintage is significantly more valuable than the rest of a collection. General risk factors such as fire and breakages can be covered, along with any other issues relevant to wine collections, such as climate control system failure.
Keeping a close watch
But it’s not just about getting the insurance right. Constant vigilance over storage conditions is a vital task for any wine collector hoping to maintain value. Things like temperature, humidity and even cleaning products stored nearby can impact the quality of a fine wine and thus hugely affect the value of them if something goes wrong.
There are simple steps which can be taken to ensure protection against these factors, such as fitting an alarm system that can detect fluctuations in temperature and humidity. This not only provides owners with peace of mind but can also help them to get the right insurance, and at the right cost.
Help is at hand
With so much to consider, protecting a valuable wine collection can seem overwhelming, but it doesn’t have to be. Enlisting the help of a broker, whose job is to provide guidance and unrivalled expertise on a subject they’re passionate about, can quickly put your mind at rest.
Specialist brokers not only identify the right policy for your specific requirements but can also recommend other professionals through established networks. For example, they can suggest appraisers who can advise on optimal storage and transportation conditions, and investment professionals to help navigate how to buy and sell fine wine.
Moreover, a specialist adviser can be at hand to keep on top of market developments that could affect a collection’s value, alerting owners if they think those changes could leave them underinsured.
Getting it right
It’s clear that collectors need to put a lot of work into making sure the value of their wine collection doesn’t drop, but meticulous storage conditions and specialist insurance policies can work wonders here. Collectors simply need to remember that expert knowledge from professionals can help to determine the best possible route for their wine collection, and also guard against underinsurance.
Bernard Hayden, Head of Risk Management, Azur