As with other classes of property eligible for the personal articles form, fine arts are covered on an open perils basis. However, there are important differences on several points.

Coverage of individual fine arts items is on a valued basis, not an actual cash value (replacement cost less depreciation) basis as with other forms of eligible property. In other words, the amount of insurance designated for each item in the schedule is the measure of loss of that article. Blanket coverage may be written not to exceed 10% of the total schedule; specific permission is required for blanket coverage in excess of this amount. Note that coverage on blanket items is on a cash market value basis and is subject to a 100% coinsurance clause. No coinsurance clause applies to scheduled items, but underwriters usually insist upon insurance of at least 80% to value. If they are not satisfied with the submitted schedule of values, they may endorse the contract to put coverage on an actual cash value basis.

Unlike other property insured under the personal articles form, coverage of fine arts is not worldwide; instead, it is restricted to the United States and Canada (note that in territories where the exposure is great, an endorsement excluding windstorm, tornado, and hurricane as covered perils may be added). Further, there is an exclusion of property on exhibition at fairgrounds or on the premises of national or international expositions unless such premises are specifically covered by the policy to which the fine arts coverage is attached.

There is automatic coverage for 90 days on newly acquired property. The insured must report such new property to the company within 90 days and pay a pro rata premium from the date of acquisition. However, coverage under this provision is on an actual cash value basis; hence, it is important to schedule appropriate items as soon as possible. The limit of this automatic coverage is a stated percentage of the total amount of insurance, not to exceed 25%. The insurer, however, may provide a lower limit.

Also, there is a special “pair and set” clause for fine arts that differs from that of the clause applicable to other classes of property insured under the personal articles form. For articles of fine art which are a part of a set, the company agrees to pay for the full value of the set as scheduled but then takes possession of any remaining part or parts.

There is another special provision affecting the fine arts coverage in that the named insured must agree that the covered property will be handled by competent packers if and when the fine arts items are transported somewhere. Presumably, if the named insured tried to move a fine arts object by himself in the trunk of his car and the object was subsequently damaged or stolen, the insurer could use this special provision to attempt to deny coverage based on the insured’s breach of the contract.

In addition to standard exclusions of the basic personal inland marine floater, there is no coverage on fine arts for damage resulting from repairing, restoration, or retouching. Neither is there coverage of breakage of art glass windows, statuary, marble, glassware, bric-a-brac, porcelains and similar fragile articles unless the loss is caused by fire, lightning, aircraft, theft, windstorm, earthquake, flood, explosion, malicious damage or collision, derailment or overturn of a conveyance. Full open perils coverage may be arranged on specific fragile articles. The articles otherwise subject to the breakage exclusion must be scheduled separately for this coverage, with a separate amount of insurance indicated for them subject to additional premium, of course.