Art theft and damage why insurance makes sense
Art Insurance is there to cover damage and theft, but a key question many art owners ask themselves is whether their art work is really at risk of being stolen or damaged?
Art theft is typically for
the purpose of resale; or
for ransom (sometimes called artnapping).
use by criminals as collateral to secure loans.
The law governing Insurance for Art & Collectables
Lets start at the start.
If you have art or collectables within your SMSF, then you need to be aware of, and comply with, the new rules that govern them, otherwise you’ll be in trouble (e.g fines, funds complying status etc). One of the new rules relates to insurance.
The regulations require that all art and collectables are insured in the name of the fund within seven days of acquisition:
The rules apply immediately to all new investments in these assets made on or after 1 July 2011.
If your SMSF held an investment prior to 1 July 2011, it has until 1 July 2016 to comply with the rules.
What are the key issues?
What are Art, Collectables and Personal Use Assets?
The rules applying to Art & Collectables held within your SMSF are important to understand, but as a starting point its worth noting that the ATO actually refers to collectables and personal use assets. So, what exactly is a personal use asset?
Superannuation Industry (Supervision) Act 1993 (SIS Act) Regulation 13.18AA (1) specifies the assets that are taken to be collectables and personal use assets as:
