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Insurance for war loot claims on the rise

Increasing numbers of private collectors, dealers, museums, and banks have been buying policies to protect their assets

Certain US banks and finance companies are requesting that clients purchase title insurance before agreeing to arrange bank loans secured against art.

Art title protection insurance became available in the US about ten months ago, through the New York-based Aris Corporation. Since then increasing numbers of private collectors, dealers, museums, and banks have been buying policies to protect their assets.

In February, the insurance company Chubb also added title defence coverage—offering $100,000 towards litigation fees—to existing policies.

Andy Augenblick, founder of Fine Art Capital, an art finance firm that has worked with Aris, told The Art Newspaper: “There are some transactions where we are only able to make the loan when title insurance is in place.” He added: “While people have traditionally chosen to self-insure, they’re finding that they can’t get perfect information about World War II. Before they make a significant investment, they want to make sure they own the asset.” Policies will refund the cost of a work if a legal judgement is made in favour of a claimant. But this comes at a price: policies currently range from 1% to 5% of the value of the work of art being insured.

Unlike real estate, where title can be traced through government records, it is difficult to guarantee the title of art. Title disputes relating to Nazi-era thefts have prompted demand for reinforced protection.

Aris founder and president Judith Pearson cites the recent claim against a Picasso owned by the Andrew Lloyd Webber Art Foundation (Portrait de Angel Fernandez de Soto, 1903, below) and the subsequent withdrawal of the work from auction at Christie’s New York in 2006. She says title insurance would have protected the foundation’s interests. Ms Pearson told The Art Newspaper that she has written policies for art ranging from $40,000 to $100m. No claims have yet been filed, she says.

However, an important area of title dispute not covered by Aris is the complex and contested field of antiquities; the company says it may include this in the future. Aris is also planning to open a London-based office.

Originally appeared in The Art Newspaper as 'Insurance for war loot claims'