How can I protect my wine investment?

BY KATJA ZIGERLIG AND RYAN O'CONNELL

Building a wine collection is not just a passionate pastime; it also can be a savvy financial move. Investment-grade wines – including high-end Bordeaux, Burgundies and cult California Cabs – have consistently held their value.

Many investment-grade wines get better with age, giving you time to decide whether you want to drink or sell select bottles. Either way, you can take steps to preserve both the taste and value.

First of all, know the threats. We find most claims result from these five areas: temperature control malfunctions; theft or disappearance; power outages; water damage from flooding; and bottle breakage. Taking the following measures can mitigate these problems.

Insure your wine through a private collections policy
Unfortunately, the majority of wine collectors do not have adequate insurance. They accumulate wealth in their cellars, but few think about the perils facing their “liquid” investments.

Most homeowners policies specifically exclude coverage for perishables, such as wine. The easiest way to insure wine is via a distinct private collections policy. You can choose one of two options. A blanket policy features one overall coverage limit and is the best choice if you intend to eventually drink what you have acquired. This option also affords the flexibility to add and remove bottles without having to notify your insurance carrier – unless the value of an individual bottle exceeds the limits on your policy.

Alternatively, if you own high-priced bottles and/or intend to hold onto your collection, a scheduled policy is a better option. With this policy, each bottle or case is itemized and insured individually.

A good wine insurance policy will include:

• Broad, customizable coverage
• Mechanical breakdown coverage
• Immediate coverage for new acquisitions
• Worldwide coverage
• Coverage for bottles in transit

Expect more from your insurance provider
Wine is both high maintenance and low maintenance. It is highly susceptible to changes in temperature, light and humidity. Therefore, look for an insurance carrier with an in-house team of risk management specialists who can help you properly manage your collection. These services should include:

• Transit advice to determine the most appropriate method for transporting wine.
• Emergency planning for collectors residing in areas prone to catastrophes.
• Guidance on inventory management, appraisal coordination, security advice and wine storage solutions.

Evaluating your insurance needs is an important step in protecting your wine collection. An experienced insurance agency can work with you to determine solutions to your unique needs and to ensure that you are maintaining adequate coverage.

Katja Zigerlig is assistant vice president of art and wine insurance for Chartis. She can be reached at (212) 770-6394 or katja.zigerlig@chartisinsurance.com. Ryan O’Connell is a vice president at Rogers & Gray Insurance Agency. He can be reached at (508) 790-4416 or oconnellry@rogersgray.com.


Published in Cape & Plymouth Business September 2010