Protecting art on board superyachts

21 January 2015By Shaw McCutcheon
There are legal considerations to bringing investment-grade art on board a yacht.

Adding the special touch that only a work of art can provide is one way to make a superyacht truly distinctive. However, carrying a multi-million dollar piece on board presents unique challenges, concerning the environment, security and insuring the pieces.

Beyond a yacht designer’s aesthetic and functional questions regarding placement, styling and securing the art, there’s also the environment to consider. What happens, for example, if the air conditioning goes kaput?

Perhaps most important of all to a yacht owner who has spent millions cultivating their art collection is the matter of security. How safe from theft is a yacht, compared to a home or business? If the yacht is available for charter, is the security problem magnified? Finally, do any special insurance issues arise when major artworks are displayed on the water?

Insuring art on water

As Robert Salmon of The Willis Group explains, when a few pieces from a large, substantial collection are put on board a boat, the insurer looks at the collection’s total value and where it is displayed, which is usually in various residences.

Typically, the value of the art on the boat is not that great, relative to the sum of the whole collection, so coverage of it is essentially ‘thrown in’ at a similar rate under a policy that covers the art collection separately from the yacht.

Art on the yacht of a non-collector is ‘a completely different risk,’ says Salmon. ‘Then you have works of art that are pretty much 100 per cent on a yacht.’

In this case, the art may be covered as part of a policy purchased for the yacht herself. One consequence is that the art may not remain covered when it is moved off the yacht, which is a time when the possibility of damage to a piece increases.

For owners with a large collection, an art policy would cover such damage, but owners who have only one or two major pieces displayed aboard might not be covered, according to Nancy Poppe of The Willis Group.

Insurance limitations

Certain limitations may also apply when artwork is covered under a yacht’s policy.

Art varies greatly in value, ranging from a Picasso painting or a Giacometti sculpture that might be even more expensive than the yacht itself, down to a $50,000 Donald Demers oil-based nautical scene. Owners can cover the latter under the yacht’s insurance policy, but often only up to a point, says Scott Lockman, head of the yacht division at Marsh.

For example, coverage may be limited to $5,000 per item and top out at $50,000 in total. Of course, yacht owners always have the option of purchasing increased coverage for higher-valued pieces, or they can instead opt for a policy that covers their artwork separately.

The insurance company is not usually concerned with the yacht’s interior environment, feeling that it’s often superior to what many clients have in their homes. Physically speaking, the environment inside a superyacht would usually be considered a safe works of art. Temperature and humidity are kept constant and are maintained by a full-time crew. Even so, accidents can happen.

‘It’s rare, but it does happen that you lose all power,’ notes Glade Johnson, a recently retired American yacht designer. ‘The AC goes down, and you’re sitting in the Med in the middle of summer. You’ve got high humidity, and you’re trying to get to a shipyard.’

Paper art works, such as watercolours, are especially susceptible to environmental damage in adverse conditions, not only from humidity, but also from direct sunlight. Oil-based art and sculptures fare better in such an environment.

Insurance-wise, exposure to sunlight is an important consideration. If a work of art deteriorates because of too much sunlight, it’s considered ‘gradual deterioration’ and subject to exclusion.

One or two major pieces on display aboard a superyacht may not be covered by an owner’s insurance policies.

Security factors

Insurance exclusions also apply to geographic areas. Yachts passing Somalia, for instance, must provide a navigation plan to the underwriters, have a security plan in place, stay 800 to 1,000 miles from the coast, and be escorted by warships.

‘Insurers provide coverage only as long as the boat stays within approved areas,’ says Lockman. This exclusion applies not only to the art, but also to the yacht itself.

Other than the normal concerns of fire, water damage or sinking, yachts are considered as safe as or even safer than many homes or businesses. The compound-like security measures of yachts can give a great deal of peace of mind to both owners and insurers.

Most large yachts have multiple security systems, including cameras or contact sensors on the deck. Artwork also can be fitted with virtually unnoticeable GPS tracking devices that allow it to be traced after a theft.

‘A boat can actually be made a safer place than anywhere else,’ says Patrick Estebe, president of AffAirAction, a firm specializing in yacht security. ‘You just have to know how to do it. The boat is the cocoon for the artwork. If the cocoon is made secure, then the art will be secure, too.’

The issue, he adds, is not the systems, but training the crew to properly use those systems and to be constantly thinking about security.

Although art theft from a yacht is exceedingly rare, it does occur. The most famous incident happened in 2010 in Antibes when a Picasso was stolen off a 75m superyacht.

The vessel was undergoing repairs in a yard when the painting, which was normally attached to an alarm, was removed and disarmed so painters could work on the wall behind it. The piece was locked in a separate room that had no alarm; and it was gone by the next morning.

An alarm-protected Matisse in the salon wasn’t touched, confirming the general effectiveness of yacht security systems.

Still, if incidents like this make art collectors nervous about displaying a highly valued piece aboard their boat, they do have another option: make a copy.

‘It’s a good way to go,’ says UK yacht designer Andrew Winch. ‘A copy can be painted using exactly the same medium, so if the original was done with a palette knife and thick oils, you would get that signature surface as well as the composition.’

To most viewers, it’s like looking at the real thing. And the owner has the reassurance that nothing bad can happen: it’s only an imitation, while the real piece is safe at home or in a vault.

For many yacht owners who are avid art collectors, the motivation to put art aboard their boat is simply the desire to have a Warhol, a Lichtenstein or a Wyeth on view. But investing in high-end art makes economic sense as well.

Currently, the investment-grade art market is definitely very strong.

Investing in art

‘The investment-grade art market is definitely very strong,’ says Lisa Burgess, whose New River Fine Art gallery in Fort Lauderdale, Florida, frequently sells works to yachts. ‘Many people are looking at fine art as a safe haven in this economy.’

There is no question that the blue-chip artists have appreciated very well. Last year, record-setting prices of more than $100 million (£65 million) each were set for a Picasso and a Giacometti. Driving the prices upward are buyers in the Middle East, China and Russia. Not surprisingly, many of these buyers are also purchasers of the largest yachts.

‘Collectors often come to buy a named artist with the intention of making a statement,’ says Bobbie Lemmons, a New York gallery owner. ‘Collectors don’t buy art to decorate, they buy art to build collections.’

At its heart, the yachting experience is the ultimate leisure activity, and most things aboard a yacht are centred on making the day fun. Jet Skis, scuba gear, fast tenders, fine food, hot tubs, private theatres and sunset mojitos on the aft deck all focus on giving more pleasure to owners and their guests.

Works of art can be viewed in much the same way. They help make the on-board experience even richer and more satisfying. And if these collections are nurtured and protected properly, artwork aboard a yacht can make its owner richer as well.

Originally published: Showboats International, September 2012

Bugsy Gedlek

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