Presumably prompted by the recent rise in the number of cases where the title of artworks in the US is contested, an insurance firm is for the first time offering specific coverage for the costs associated with such claims.
The fact that many museum artefacts in the UK are uninsured  due to the prohibitive costs, it would seem unlikely that such a product would be popular amongst public institutions here, although maybe there are some that ought to consider it.
Maine Antique Digest 
New Firm Offers Title Insurance for Art
by Lita Solis-Cohen
Considering the amount of newsprint devoted to stories about repatriation of looted art, art dealer bankruptcies, stolen art, WPA art seized by the government, and artists involved in copyright litigation or asking for residual payment when their works are sold in the secondary market, it is not surprising that someone would come up with a safety net for the collector: title insurance for art.
Lawrence M. Shindell, a Milwaukee attorney with a specialty in art law, and his sister, Judith L. Pearson of Denver, a veteran in the insurance business, have launched ARIS Title Insurance Corporation in New York. They are ready to sell their new product, Art Title Protection Insurance (ATPI) policies that insure title but not authenticity. Larry Shindell is the chairman and CEO, and Judy Pearson is president and director of the new company.
Title insurance for real estate has been around for more than 100 years, but title insurance for art is a relatively new idea. Some in the personal property insurance world say the idea was first proposed in the 1980?s when the first claims were made to return to rightful owners art seized by the Nazis. It took Shindell and Pearson more than six years to launch their special brand of art title insurance, which they say is designed for museums, financial institutions, collectors, dealers, art investment funds, auction houses, and living artists.
?It took a long time to work with the regulators, to put the round peg in the square hole,? said Pearson in a phone interview. ?We put the curtains up on June fifth, and twenty-four days later we had our first inquiry. We are the only art title insurance company incorporated in the state of NewYork or anywhere else in the U.S. or the world.?
ATPI is designed to insure the chain of title and lien risks for art in the same way that title insurance works for real estate. Hiscox, a Lloyd?s of London syndicate, is the reinsurer. ARIS Corporation and ARIS Title Insurance Corporation are subsidiaries of ARIS Holdings, Ltd. The title agency underwrites legal titles, settles claims, and picks up all the legal fees should the work of art have to be returned. Unlike with real estate title insurance, when a painting goes up in value significantly the insured must buy additional coverage up to the new value.
?Art is an asset that needs to be managed like any other asset class,? said Pearson. ?For example, a collector gives a painting to a museum, and the museum hangs it on the wall, and someone recognizes it as theirs and raises a title dispute. The gifter has already received a tax deduction, but if the gifter has title insurance we can defend him and work with the IRS and protect him from an unwound charitable gift.?
Pearson said much interest in art title insurance is from collectors who have art owned in Europe from 1938 to 1948, bought in good faith, that they now want to sell. ?The owner can ask us to insure good title so the gallery or auctioneer can offer it for sale with insured title. Then if the heirs of a former owner claim the picture, we refund the insured value to the collector and pay all legal costs.?
Pearson said she was surprised that living artists want to insure their art as it leaves their studio. ?The artists believe that if the galleries that represent them can offer their work with the title insured it is a good selling point that might be even more useful twenty years down the road when the work is in the secondary market. The cost of title insurance to the artist is at a far lower rate than for a million-dollar painting owned in Europe during World War Two. If there is a gap in provenance for a million-dollar picture, the average cost for title insurance is five percent, or fifty thousand dollars for the million-dollar picture. It can be more, and it can be less for less risk,? she said.
The price of fine art title insurance is higher than for real estate title insurance, which is set by the states. For example, title insurance in Pennsylvania for a $1 million to $2 million house costs $2.75 per $1000, or a little over a quarter of a percent.
?Each work of art must be looked at individually,? said Shindell. ?There are no deeds recorded, so we must research the provenance.? There are other differences, Shindell pointed out. ?In real property there is no deductible, but fine art insurance can have a deductible. You can buy it for the life of ownership, and in that case, by law, the title insurance passes on automatically to heirs. But if someone wants to put a painting in an exhibition it can be insured only for the time it is on public view.?
Pearson said that in these litigious times every painting should be sold with title insurance. Collectors, however, can be unwilling to spend extra money on anything but art. Even when they give their collections to museums, they may not want to pay for the display cases, and they buy fine art insurance reluctantly. Only since 1986 when the tax laws changed and collectors could not deduct the loss of or damage to paintings and decorative arts did fine arts insurance policies become popular.
Gallery owners, insurance providers, auction house personnel, collectors, and museum directors are reluctant to go on the record and say title insurance for art is a great idea. Some pointed out that when buying art no one wants additional negotiations. One lawyer/collector said that he cannot see spending 20 times as much as the cost of real estate title insurance for a policy that may not have sufficient documentation of provenance or chain of custody to stand up. Museum people pointed out that there is a federal program for immunity from seizure that can be applied for when lending objects or paintings to exhibitions. Warranty guarantees from dealers provide that if there is a problem of ownership they can rescind the transaction. Many dealers, auctioneers, and collectors check the Art Loss Register regularly. Christie?s in NewYork has a full-time director of restitution, Monica Dugot.
Others said that if Shindell and Pearson can reduce the cost, they may sell a lot of policies and have a lucrative business. If collectors and their advisors demand it, ARIS?s Art Title Protection Insurance may fly.
?I think it is a great idea,? said Michael Moses, cofounder of Beautiful Asset Advisors and cocreator of the Mei/Moses Fine Art Index. ?If museums become proactive and accept things only with clear title or title insurance, ARIS will have a good thing going. It should be a fiduciary responsibility of museums to purchase or accept gifts only with clear title. Most asset-based transactions require good title, and if museums require title insurance it will make for a more efficient market. Then there will be a risk premium for things without title insurance. People will pay more for less risk.?
Moses believes title insurance would increase transparency in the art market by revealing the ownership pattern. ?If you don?t have to worry about ownership, it lessens the risk of the transaction. I think it is an important idea to move art into the realm of other assets. We should be able to buy title insurance just the way we buy title insurance for real estate. When transparency goes up, liquidity will go up, and that would be good for the art market. I hope they succeed.?
For more information log on to the Web site (www.aris-corporation.com).