Observer: Should Art Be Insured Against Terrorism?


Every year, Crozier, a major fine art storage company with six locations on the east coast and one in Los Angeles, holds what Simon Hornby, the company’s president, calls “risk matrix exercises.” Though it might sound like something out of a Tom Cruise franchise, the reality is a little more mundane.

It’s essentially a test of “all of the exposures we are subject to,” said Hornby. The potential for physical break-ins, for instance, or the possibility of “natural gas being cut off—that happened during [Hurricane] Sandy” in 2012—and the need to rely on back-up generators if electrical power was interrupted. Climate controls for some very delicate objects would be compromised if heat and humidity levels were unable to be maintained.

Then, there are worries about cyberattacks in which an outsider might try to take over Crozier’s computer system, demanding a ransom or hacking into clients’ personal information. “That would be devastating and lead to a loss of credibility for us,” he said. Among the protections that Crozier purchases is cyber security insurance, often referred to in the industry as “social engineering” coverage, and it purchases terrorism insurance as well.

When reviewing a Borrower’s insurance/Certificate of Insurance consider:
_Is Full Terrorism included?
_Is Earthquake, Windstorm, or Flood covered?
_Is the carrier known for fine art insurance and for paying claims?

As opposed to maintaining the generators, updating the computer security systems and establishing what to do if someone tries to break in, terrorism is more difficult to plan for, because, as Hornby put it, “you don’t know what it might be.” And its somewhat nebulous, albeit frightening, definition might be causing many to be unsure of whether they need to protect their collection against such scenarios or not, though the very existence of terrorism insurance for art has perhaps led some to believe they should…