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May 2014

Insurance Deductible Deducted from Whom?

Insurance Deductible

Just wanting your opinion on something. If art is stolen from a gallery and the gallery has insurance but there is a deductible, who is responsible for the deductible?

This just happened to a friend of mine. She said her consignment contract said that the work was insured "while on the premises." There is nothing in the contract about a deductible.

A Reader

Great question. I'd like to be able to read the specific consignment contract under discussion here.  Everything depends on the contract.  Normally, when a consignment contract says that the work is insured, the deductible is the Gallery's responsibility.  Unless the deductible issue is specifically written into the contract, the artist's work is insured for the full artist's/wholesale price. 

Usually the gallery unilaterally decides on the amount of the deductible with their insurance carrier. The gallery makes a choice  among insurance plans ranging between no deductible with a higher insurance premium or a higher deductible with lower premiums. The deductible is a business decision by the gallery. The artist has no control or knowledge about the amount of the deductible. Security issues at the gallery premises are outside of the artist's control. Loss of work while at the gallery is consequently the gallery's sole responsibility. 

It would be unethical for a gallery to expect the artist to pay any portion of the deductible when the consignment contract explicitly states that the artwork is insured at the wholesale or artist's price.  

Ideally to prevent any misunderstanding it would be best to clarify this issue in the contract. 

The Professional Guidelines Consignment Contract specifically states:

"9. Insurance. The gallery shall insure the artwork for its full wholesale price.  In the event an insurance claim is made, the gallery shall pay all deductibles."

I found another excellent example for "Insurance" from a different contract. In this example, the artwork is insured for full retail in case of loss or damage. 

"11. Insurance.
The (name of Gallery) shall insure the artwork for its full retail price. In the event an insurance claim is made, the (name of Gallery) shall pay all deductibles."

Beyond the question above from "A Reader," she was worried about making a "fuss" with the gallery about the deductible. This is really shocking though not unusual. I often hear from artists and makers concerned about standing up for themselves. They are so concerned about losing the gallery that sells their work.

WHAT! They are concerned about losing a gallery that just lost their work?  They are concerned about alienating a gallery that will not honor their contract, but wants the artist to pay the deductible?

Any professional person should not be so desparate to maintain a relationship with a gallery that does not respect a business arrangement specified by a contract.

Sorry. It is time for artists and makers to realize that they are in business. A Consignment Contract is a contract -- i.e. a business arrangement. 

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P.S. You might be wondering why I had to learn how to convert PowerPoint to video? All my previous PowerPoints were uploaded to SlideShare as SlideCasts with recorded audio. Unfortunately, SlideShare has decided not to support SlideCasts any longer. All my presentations were silent. While SlideShare presentations without audio can be great, my content was not designed for no audio.  My choice is either delete presentations, or updating past presentations to video. 

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