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ARTICLES OF INTEREST Loss in Value / Diminished Value |
How does art work with a history of damage and professional conservation perform when re-introduced into the art market place? Often sale at an auction is the most expeditious venue for works with a pre-incident value of six figures or higher. What about art work that is not as valuable? Many factors affect performance at public auction. To help decide if sale at auction is viable, many insurance companies turn to Patrick B. King & Associates, Ltd. for salvage advice. First compare professional conservation cost to actual pre-incident value (which in this volatile market might be less than the scheduled or agreed value). Consider the type and degree of damage and the quality of restoration and or treatment. A quick rule of thumb: when a of work art can be successfully restored for under 10% of its current value, it is definitely appropriate to pursue this avenue. Analyze the merit of the artist in the market place. Research is important here. King & Associates reviews research data collected by Art Facts to identify the auction that will offer the greatest potential for sale. Contemporary art is tricky. Works by obscure artists traditionally do not perform well at auction. The "name" is important in the auction "game". Rely on professional research to gather the important information. Salvage Case Study Dollar recovery expectations: will you get all of your money back? Probably not!! How much can you expect? A contemporary metal sculpture by a well known artist was scheduled for $45,000 which the owner collected after minor damage was sustained. The insurance company took the damaged sculpture as salvage. The adjuster contacted Patrick B. King & Associates for guidance. Armed with research prepared by Art Facts and the analysis by Patrick B. King & Associates, the adjuster made a wise decision to invest in the cost of conservation. scheduled value $45,000 conservation cost $2,000 gross disbursements by insurance company <$47,000> receipt from sale at auction (less expenses) +$21,000
net loss to insurance company $26,000
This adjuster reduced an initial loss of $45,000 to only $26,000. The company’s "bean counters" were thrilled!
Our Company offers insurance companies cost effective salvage processing solutions through a variety of different methods of sale, including percentage of sale consignment and purchase agreement.
Author: Patrick B. King Patrick B. King & Associates
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Professional Insurance Appraisers & Estimating
e-mail us at: pbking2@sbcglobal.net Patrick B. King & Associates 7326 North Central Park Avenue Skokie, IL 60076 847-679-4747 Ó Copyright Patrick B. King & Associates 2011 |
