Dorit Strauss, a vice president and worldwide specialty fine art manager at Chubb, cautions that when deciding whether to lend to a museum, a collector should first check whether it is accredited by the American Association of Museums, to ensure that it meets the organization’s standards, and even find out where the works will be displayed and under what conditions.

We suggested that Amanda’s pieces be insured under the policy of the borrowing museum, in addition to her own policy, since the borrower usually controls how the works are packed, shipped and exhibited. Moreover, in the event of damage, the borrower would indemnify her, and her premiums wouldn’t be affected by the loss. We also advised Amanda to obtain a certificate of insurance from the museum showing that the works are insured before they are shipped and—this is important—that she be listed as the “loss payee” under the museum’s insurance coverage. That way, the insurer would pay Amanda directly, and she wouldn’t have to fight with the museum to collect insurance proceeds down the line. Finally, we negotiated the terms of the insurance coverage in the museum’s loan form to bind the museum contractually.

Perhaps predictably, Amanda’s prized glass unicorn was badly chipped while on loan to the museum. She immediately contacted her insurance broker, who recommended that she not rely on the valuation provided by the museum’s insurance company; instead,she was advised to have the piece evaluated by her own independent specialist—or, better yet, by two specialists. Her broker suggested a dealer and an auction-house professional, both of whom would know the current value of the piece. Armed with information from these experts, Amanda was able to negotiate a handsome settlement with the museum’s insurer for the injured unicorn.

Insuring smartly can prevent disputes with people who may not treat you or your collection kindly. As Tennessee Williams might have put it, it’s best not to rely on the kindness of strangers.

"Crystal Clear" originally appeared in the October 2008 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's October 2008 Table of Contents.