Forbes.com, November 2, 2020
Many of us simply open a $15 bottle of wine, pour a glass and sip it. Other people savor the art of collecting wine, whether it’s for pure pleasure or as an investment. But some of those collectors fail to insure their valuable vino—wines that can fetch hundreds of thousands of dollars per bottle.
Dan Frankel, principal of Acacia Insurance Agency, which operates the site InsureMyWine.com, says that based on his conversations with wine storage facilities and wine logistics companies, he estimates that less than 5% of wine collections are insured. Bouchard Insurance, which sells wine coverage, puts the number at less than 10%.
Regardless of the percentage, going without coverage could be riskier than drinking red wine on a white sofa, since Frankel pegs the average value of a wine collection at about $200,000.
Certified sommelier Melissa Smith, founder of Enotrias Elite Sommelier Services, which appraises and inventories wine for insurance purposes, says the wine collections owned by her clients generally range from $30,000 to several million dollars in value. But over the past decade, only a handful of Smith’s clients have carried wine insurance before she started working with them.
“I think they start collecting and then get overwhelmed with the idea of inventorying and then figuring out its worth, and never get around to buying wine insurance,” Smith observes.
Going without coverage
Unfortunately, going without wine insurance could be a costly misstep. Many wine connoisseurs assume homeowners insurance adequately covers their collections, Smith says. But most homeowners policies don’t cover common threats to wine collections, such as flood damage; mechanical breakdowns that affect heating, cooling and humidity control; a power outage that could spoil wine; and breakage that occurs during shipment.
If you keep your collection at a professional off-site wine storage facility, insurance might be available at an additional cost. And if you store your wine collection at home, you might need to purchase extra coverage.
Options for wine insurance
One way you might be able to cover your wine collection is with what’s known as a personal articles floater, which is an add-on to a standard homeowners insurance policy.
Loretta Worters, a spokesperson for the industry-backed Insurance Information Institute, says a small or inexpensive wine collection often can be insured under an existing homeowners policy, particularly if the wine is for your own consumption. Typical coverage limits range from $1,000 to $2,500.
Larger wine collections require a standalone personal articles floater, which provides broader coverage than a homeowners policy, Worters says.
For a wine collection, a personal articles floater can give you bottle-by-bottle coverage or blanket coverage for all of the bottles. For larger collections that include high-value bottles (perhaps $500 or more), it makes sense to insure on a bottle-by-bottle basis, Worters says. The floater typically covers items worth $5,000 to $50,000. Floaters usually don’t have a deductible.
Another option: specialty wine insurance. This can be purchased as blanket coverage for a complete collection or as bottle-by-bottle coverage. Ironshore, a Liberty Mutual company that sells specialty wine insurance, recommends blanket coverage for lower-value collections and bottle-by-bottle coverage for collections with a variety of higher-value vintages.
AIG, another provider of specialty wine insurance, says a blanket policy offers an overall coverage limit. This coverage is best for those who want to drink the wine they’ve collected, the company says. Plus, you can add or subtract bottles without informing your insurer every time you do it. You would, however, need to tell your insurer if the value of newly acquired bottles increases the collection’s value and exceeds the coverage limit, according to AIG.
Meanwhile, bottle-by-bottle coverage is preferable for wine collectors who plan to hang onto those bottles over the long haul, AIG says.
What does wine insurance cover?
If you buy wine insurance, what does it cover? You can expect coverage for:
Theft or burglary.
Damage caused by a fire or flood.
Lost or misplaced bottles.
Accidental breakage. This could include damage that happens when wine is being transported from one place to another, such as from a winery to your home.
Damage caused by a mechanical breakdown or power outage affecting a climate- controlled wine storage unit.
Damage caused by a sewer or drain backup.
Damage to a bottle’s label caused by a fire, flood or other natural disaster. In many cases, the label boosts the value of a rare wine.
Damage caused by an earthquake or hurricane. A special deductible might be added, though, usually as a percentage of the entire coverage amount.
Once you open and start to drink a bottle of wine, coverage no longer applies.
When to buy wine insurance
Laura Doyle, a vice president at Chubb, which sells wine insurance, says the decision about buying wine coverage depends on a person’s risk tolerance.
Ken Sidlowski, leader of the Private Client Group at insurance broker The Horton Group, says that if a wine collector tends to be more risk-averse than risk-tolerant, they definitely should chat with an insurance advisor about wine coverage.
“Some of our clients choose to insure bottles that are valued at a few hundred dollars,” Doyle says, “while others only insure wines that are valued at more than $1,000.”
The cost of wine insurance
Estimates of the cost of specialty wine insurance range from 40 cents to 80 cents per $100 worth of wine. So, if the cost is 60 cents per $100 and a collection is valued at $100,000, the annual premium would be $600.
Doyle of Chubb says a personal wine collection valued at $100,000 would cost $400 to $600 a year to insure. Factors that go into pricing wine insurance include:
Where and how big the collection is
How much exposure there is to windstorms, wildfires or earthquakes
How the collection is managed, including security and fire-detection measures
Sidlowski said his brokerage generally doesn’t work with clients whose collections are valued at below $85,000. That’s because the specialty wine insurers that The Horton Group works with usually balk at covering lower-value collections that their owners likely could self-insure, he says.
At Chubb and other wine insurers, policies normally cover wine when it’s kept at home or in an off-site facility, or when it’s in transit. This is known as worldwide all-risk coverage, which encompasses all losses that aren’t specifically excluded. Situations that might be covered include theft, fires, earthquakes and even mysterious disappearance.
How to insure wine
In order to insure a wine collection, you must appraise the value of the collection to figure how much coverage you need, according to California Winery Advisor. In addition, you must keep your inventory list up to date.
Smith, the sommelier, recommends that a wine collector hire a professional to perform an inventory for insurance purposes, as she’s had clients “wildly overestimate and underestimate what their collections are worth.”
“Consumers are not aware that it may not be that expensive—that it might actually be cost-effective—to work with a sommelier or a wine appraiser just to get an idea of what their collection is worth,” Sidlowski says. “And are they storing it in the right place? Is it important to them to consume the wine or is it important to them to keep it long term?”
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