Wine collection is on the rise as passionate connoisseurs accumulate prized bottles or investors seek an alternative asset class. Serious collectors purchase rare labels and the world’s top vintage bottles to amass an enviable assortment of fine wines. The quality collection may boast bottles of Burgundy, Bordeaux or Pinot Noir; yet the risk exposures faced by wine collectors are well recognized within the specialty high value insurance market. Insurance protection of an individual’s fine wine collection can be secured through a range of coverage options, depending on the intended usage, collection objectives and preferred method of storage.
An oenophile – a connoisseur of wine - is informed and knowledgeable about nuanced characteristics of the purchased wine. Noted global wine producing regions, grape composition, vineyard reputation, harvest year, and bottle rarity are amongst the many factors that determine worth. Wine collections should be adequately insured to protect against loss whether the intended usage is to savor wine drinking with friends or for special occasions or as an investment, based on the bottle aging.
Standard high net worth homeowners insurance policies typically would not protect the investment of a highly priced wine collection. Loss resulting from theft, fire or bottle breakage, a common risk, may be covered as a property damage claim. The leading risk exposure for wine collections is spoilage, caused by extreme temperatures, dampness, humidity levels, dryness or even a power outage. Collectors with wines valued under $5,000 (USD) would be advised to secure a rider or endorsement attached to the homeowner policy. A fine wine collection that is amongst an individual’s investment along with other asset classes, collectively valued at $500,000 (USD) or more, should obtain high value specialty insurance coverage for the asset.
Specialty insurance policies can be underwritten as a “blanket” policy for the entire collection or on a “bottle by bottle” basis. Blanket coverage is appropriate for wine collections of lesser value, providing an additional layer of coverage above the homeowner policy rider. “Bottle by Bottle” protection is recommended for wine collections comprised of diverse, high valued fine wines and vintages. Industry underwriters encourage serious investors to secure an appraisal from a wine specialist to affix a price to the total collective value for insurance purposes. Appraisal specialists would determine the “true market value” of the wine and a commercial insurance actuary would assess the level of necessary insurance protection in the event of a loss.
Whatever the insurance cover preference, collectors should be diligent to archive an itemized bottle and/or case inventory. Equally important is that the wine collection inventory be updated regularly or, at the very least, annually as vintage wines can increase in value with aging. Often, wine merchants and suppliers will maintain the customer’s inventories and the values updated on a monthly schedule.
Wine storage is usually driven by the collector’s intended usage. Ardent connoisseurs that enjoy fine wines as part of one’s lifestyle often invest in a home wine cellar. Climate-controlled and monitored wine cellars are constructed by professional contractors experienced in structural conditions for preserving fine wines. Home wine cellars, however, can present storage difficulties. Nearly 75 percent of paid wine insurance claims are the result of unexpected home storage problems and/or an incident.
Exceptional wine collections are often stored at an off-site, temperature-controlled facility managed by a professional company. In most cases, the storage facility would carry liability cover for the asset and may offer the insured the option of taking advantage of its customer cover program rather that secure a stand-alone policy. A significant, highly valued collection may be one aspect of the individual’s other collections, such as artwork or classic automobiles. Under such a scenario, the collector may already have a stand-alone high value insurance program in place, whereby the wine collection can be incorporated within the policy.
The wine collecting culture can be fascinating in terms of appeal and personal satisfaction amongst avid enthusiasts. Whether treated as an asset investment or passionate hobby, wine collection involves an expensive financial commitment that deserves proper insurance protection.
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