Jean-Michel Basquiat, Swiss House on Fire, 1983, acrylic on canvas, 19⅝ x 27⅝ inches
Appraisal services for insurance purposes include:
1) Establishing or updating values for insurance schedules
Appraisals are frequently required by insurance companies for establishing premiums.
These appraisals assess Retail Replacement Value, which is: “A property’s highest value, usually for insurance purposes, that is defined as the highest amount in terms of U.S. dollars that would be required to replace the property with another of similar age, quality, origin, appearance, provenance, and condition within a reasonable length of time in an appropriate and relevant market.” (See: Appraising Art: The Definitive Guide to Appraising the Fine and Decorative Art, New York, Appraisers Association of America, 2013, p. 438).
For collectors of work in sectors with quickly changing values, such as postwar, contemporary, and emerging art, it is generally recommended that insurance schedules are reviewed regularly for reappraisal.
2) Assessing loss in value
Art may suffer damage from a variety of causes, including errors in packing, shipping, or storage, as well as flood, fire, and vandalism.
Whether or not a work of art has been individually scheduled on insurance policy, an appraisal may be needed in the claims process to determine the appropriate loss in value.
3) Insurance Appraisal Review
In the claims process, an Appraisal Review, as defined by the Uniform Standards of Professional Appraisal Practice (USPAP), may be required to asses the work product of another appraiser.