Congratulations! You've finally started on the long journey toward becoming a connoisseur of fine art. You've begun a collection of pocket watches with elaborate gold hunting cases, medieval French illuminated manuscripts or sleek, vintage mid-century fountain pens.
But with a new collection worth potentially thousands or even tens of thousands of dollars an important question needs to be asked. How do you intend to protect your new investment? Protection for a collection of art or antiques comes in three basic forms: insurance, safe deposit box or home safe. Each of these different forms of protection has its own pros and cons.
Insurance is something most of us are familiar with, whether in the form of car insurance, health insurance or homeowner's insurance. You can also use insurance for protecting your art or antique collection in much the same way. You pay a monthly (or sometimes annual) premium to an insurance company in return for protection against theft, damage or destruction of your collection up to a certain dollar amount.
Insurance protects against a broad range of dangers while allowing you to openly display your collection without fear of loss. The big downside to insuring your collection is that it requires a recurring monetary outlay to keep the policy in force. This usually amounts to anywhere from 0.5% to 2.5% of the market value of the collection every year.
So if good investment performance is one of your primary objectives, then insurance starts looking expensive because it reduces your annual rate of return by the same amount. It is also important to note that a typical renter's or homeowner's policy will not cover an art or antique collection; a special policy or rider must be procured.
A safe deposit box is another reasonable option for protecting your art, antiques or bullion. These small steel storage units are typically found in a dedicated room inside the main vault of a bank. They have the benefit of being very secure as banks generally employ rigorous security measures against theft.
A safe deposit box requires an annual rental payment - although these payments are usually quite reasonable at $40 to $300 per annum, depending on the size of the box. Consequently, safe deposit boxes can be quite efficient when the collection you want to protect is very compact with a high value density. Precious metal antiques such as gold coins, jewelry or silver flatware are excellent candidates for storage in a safe deposit box.
On the downside, safe deposit boxes are inconvenient to access and aren't FDIC insured in case of bank robbery or fire. Also, if a financial crisis ever forces the Federal government to declare a bank holiday, the valuables in your safe deposit box could be rendered utterly inaccessible for a time or even subjected to confiscation. This scenario - though unlikely - actually occurred in 1933 during the Great Depression when gold was nationalized in the United States.
A home safe is another option for protecting your art or other valuables. It is very important to differentiate between the cheap, imported fire safes that are commonly sold at big box stores and a real security safe. A true home security safe will have an Underwriters' Laboratories rating or an insurance company B or C construction rating. These ratings, in ascending order of security, are:
Residential Security Container (RSC) - Successfully resists door entry for a minimum of 5 minutes with small, common hand tools. Value storage guideline: $2,500 to $60,000, depending on build quality.
B-rating - Door constructed of at least 0.5 inch thick steel and walls of at least 0.25 inch thick steel. Value storage guideline: up to $20,000.
C-rating - Door constructed of at least 1.0 inch thick steel and walls of at least 0.50 inch thick steel. Value storage guideline: up to $50,000.
TL-15 - Successfully resists door entry for a minimum of 15 minutes with common hand and power tools. Value storage guideline: up to $200,000.
TL-30 - Successfully resists door entry for a minimum of 30 minutes with common hand and power tools. Value storage guideline: up to $350,000.
RSC rated safes are the absolute minimum level of protection you should consider for a home safe and may not be appropriate for high value collections. Not all RSC safes are created equal however; a broad range of protection levels are encountered within this rating. A very high quality RSC safe can even exceed a C-rated safe in terms of security. It is also vital to understand that while some gun safes carry the RSC rating (and are therefore acceptable for storing lower value collections) most gun safes do not have a UL rating and should therefore be avoided.
B and C rated safes are mid-range safes that tend to be ideal for residential settings. Their solid steel construction means they will defeat smash and grab thieves with ease. TL-15 rated safes, in contrast, are jeweler's safes with significantly higher security than a B or even C rated safe. TL-30 rated safes are commercial grade safes. These incredibly robust safes - although usually found in businesses that deal in high value goods - can still be purchased by private individuals.
Most UL rated burglary safes are also fire rated for anywhere from 30 minutes to 2 hours. Safes start at about $500 for a simple B rate unit without fire protection and extend up to $10,000 (or more) for large, TL-30 rated units. A high quality safe can also easily weigh over 1,000 pounds, so don't forget to budget extra for professional installation. Although the up-front costs are higher, a quality home safe will not only keep your valuables easily within reach but also protect them for decades to come.
Ultimately, how you go about protecting your art collection will depend on your individual circumstances. Do you want to be able to openly display your treasures? Then a dedicated insurance policy is your best option. Do you live in an apartment with limited space? Then consider a safe deposit box. Do you want to protect your antiques for the lowest cost over time? Then a home safe may work for you. In the end the right choice is the one that works best for you.
