Frequently Asked Questions About

1. I only deal with contemporary artists, why would I need title insurance?
2. How is the premium for Art Title Protection Insurance® determined?
3. Why do I need ATPI®?
   
4. Should I buy ATPI® for currently owned art?
5. How do you underwrite legal title to art?
6. Does ATPI® cover authenticity?
   
7. What if the underwriting process reveals that my art has defective title?
   
8. What does ATPI® cover?
   
9. Why do I have to worry about this? It won't happen to me.
   

1. I only deal with contemporary artists, why would I need title insurance?
   Although transactions with living artists and contemporary galleries seem to create the most "straightforward" chain of title, good-faith buyers often miss critical loopholes. Often, for example, emerging artists have exclusivity agreements with galleries. If violated, these agreements may unravel a sale. Also, if you buy work directly from artists, even if they do not have an exclusive agreement with galleries, artists' spouses also can claim ownership, especially in the case of divorce and/or death.
   
   
2. How is the premium for Art Title Protection Insurance® determined?
   All premiums are risk-based. After the underwriting process is complete, our experts will be able to assess the risk attached to the work of art being reviewed and determine the appropriate premium as a percentage of the artwork's appraised value.
   
   
3. Why do I need ATPI®?
   You have much to lose without it and so much to gain with it. You insure other significant assets, so it is good sense to insure against the known financial risks of art transactions. Despite the good-faith efforts of even the most reputable buyers, sellers, and dealers, it is common today to have provenance contested. Before the 1980s, most art buyers and dealers had little cause for concern; events over the past 26 years, however, have transformed the art world. Today, international laws affect art sold not only from Western Europe but also from dozens of other countries around the world. The Internet is compounding risk, too, because an increasing volume of information is entering the public domain about art moving throughout the world's art markets. Art is now considered to be a valuable "asset," and that, in turn, has increased the likelihood that a work of art will be subject to a legal title claim. For example, banks are increasingly accepting art as direct loan collateral and at greater value to loan ratios. Investment bankers are grouping art for mutual funds. Tax authorities increasingly scrutinize art before allowing charitable deductions or "like kind exchanges" to defer capital gains tax.
   
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4. Should I buy ATPI® for currently owned art?
   Art Title Protection Insurance® coverage available through Liberty Art Title Agency, LLC can include the necessary policy endorsements to provide coverage retroactively. In this way, you or your client could have title insurance coverage retroactive to the date of its purchase. Coverage protects against loss of the artwork itself due to defective legal title and the costs of defending a title claim. With ATPI® coverage, you or your client is protected against financial, legal, and practical uncertainties inherent in attempting to enforce private contractual indemnification from a seller years after the purchase versus having true title insurance in the first instance. If you or your client is contemplating selling or exhibiting artwork, the need for title insurance is that much greater.
   
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5. How do you underwrite legal title to art?
   When evaluating artwork submitted for title insurance coverage, the underwriter utilizes an underwriting analysis based on historical and expansive contemporary art title risk information. This information and analysis is combined with a legal framework (based on both international and local jurisdiction laws) and with information contained in the underwriter's art "title plant," the first art title risk database of its kind in the world. These proprietary processes and protocols, along with its proprietary title plant, are the result of six years of development.
   
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6. Does ATPI® cover authenticity?
   ATPI® insures ownership of art against title defects in the same way that real property title insurance protects ownership of a home. It cannot insure art for its authenticity or attribution. Why? Legal title is fact-based; authenticity or attribution, on the other hand, can be a matter of divergent opinion. When buying and selling art, you should always consult with a trusted, knowledgeable art advisor to help you practice careful due diligence when considering authenticity, attribution, and connoisseurship.
   
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7. What if the underwriting process reveals that my art has defective title?
   Underwriting operates under state, federal, and similar international laws that govern the privacy of all client information and under corporate policies of confidentiality. All title searches and underwriting, therefore, are performed with strict confidentiality: The identity and privacy of principals in the transaction and the transaction terms are carefully guarded. In the unlikely event that underwriting a policy must be declined, we will inform only the applicant and the designated advisor, if any.
   
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8. What does ATPI® cover?
   In general, ATPI® protects against:
   • Loss due to defective title from both provenance risks (including import and export) and more classic title risks such as liens, security interests, and lack of legal authority to sell
   • The cost to investigate and defend a title claim and
   • The financial, legal, and practical uncertainties inherent with any private contractual indemnification The policy form details coverage terms
   
   
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9. Why do I have to worry about this? It won't happen to me.
   Many fiduciaries, advisors, collectors, museum professionals, intermediaries, and investment advisors have said, "It won't happen to me or my client." Provenance, however, is not perfect; and even good-faith collectors, venerable institutions, and smart advisors have been seriously compromised by title challenges.
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   Find out about real problems that have happened to real people.

Real Protection:

Discuss your concerns with the dedicated, knowledgeable specialists at Liberty to determine how ATPI® can help.

Contact Jennine Orphanides:

212.324.0011
jorphanides@libertyarttitle.com