Insurance

Insurance is something that anyone organising or receiving a touring exhibition needs to understand and be aware of, most particularly establishing who is responsible for insurance at each stage in the exhibition’s life. This is especially important for a touring exhibition as it will be moving between a range of venues, transit vehicles and in some cases storage facilities, during the course of the tour, and standard cover that insures collections or loans within your building may not extend to this type of use or display. As well as protecting your physical assets, it is important to ensure that you also have the liability cover for visitors and staff.

As a touring exhibition organiser you must make it clear in exhibition details and the hire agreement when an exhibition is covered by your policy, and when the responsibility lies with the hiring venue. You will need to know the value of all of your exhibits, exhibition furniture, equipment and packaging (e.g. crates), for you or your venues to arrange insurance cover, or to check the validity of existing cover.

If you do not qualify for cover under the Government Indemnity Scheme, then commercial insurance cover will be required. Nearly all museums and galleries should be using brokers and insurers specialising in fine art and exhibition insurance and, in the majority of cases, all cover for temporary exhibitions should be obtained as an extension of the existing policy.

It is usual for each exhibition venue to be responsible for covering one ‘leg’ of the tour, i.e. their own showing and onward transport to the next venue, and for cover to need to start from the point at which the exhibition is unloaded on to their premises and to end when it is unloaded on to the premises of the next venue, or returned to the exhibition organiser. However it may be more time and cost effective to arrange one insurance policy to cover the tour from beginning to end, and for each venue to pay a proportion of the premium. If separate policies are relied upon, Condition Reports assume much greater importance, in assessing when damage has occurred and ascertaining which insurer should settle a claim. Obviously with just one insurer throughout, there is no question concerning liability. Some insurers will require a minimum premium before they will offer any cover, so a single policy for the whole tour can also be sensible for low value. In some instances, if cover for objects in transit is not part of your standard cover, it may be possible to arrange cover through your art movers for a premium.

Quotation for exhibition insurance must only be obtained from specialist brokers and/or insurers, as this is the only way to ensure that the appropriate cover is obtained at the most competitive price. Most museums and galleries will already have an existing relationship with specialist fine art insurers. If not, a broker will need to be chosen, which is most often done by recommendation from another gallery or museum. For details of specialist insurers and brokers visit the Museums Association Directory of Services: www.museumsassociation.org/find-a-supplier. A broker should be a specialist in this area, have experience in covering touring exhibitions, and they must be regulated by the Financial Services Authority.

The role of the broker is to act solely for the client. They must find out what are the exhibition organiser’s demands and needs and then obtain competitive quotations from specialist insurers. They must also advise on ways of reducing the premium or acquiring wider cover, and must draw attention to warranties or onerous exclusions. Everyone organising exhibitions must be fully aware of the Duty of Disclosure and understand what a ‘material fact’ is when obtaining a quotation. It is a legal requirement world-wide that anyone seeking a new policy of insurance or cover for additional risks or renewal under an existing policy must disclose any information that might influence the insurers in fixing the premium or determining whether to accept the risk. Under English law, failure to do so may entitle insurers to avoid cover from inception and seek repayment of paid claims. If an exhibition organiser has any doubt as to whether information is material, then they should disclose it.

How long the quotation process takes will depend on the speed at which the broker moves. Generally, most exhibitions are relatively straightforward, and the process should not take more than a couple of days. Occasionally, an insurer will require additional information which will be requested through the broker. The actual typing-up of individual Certificates of insurance may take a while longer.

The premium will be calculated using percentage rates on the values to be transported and exhibited, and will depend on factors such as the fragile nature of the items to be insured and their values. The higher the value, the more room there is to negotiate more competitive rates.

Once terms, conditions, exclusions and premium are agreed, the broker will be responsible for issuing a Certificates of Insurance. The Certificate must show who is insured, the period of insurance, the items being insured, the Agreed Values, the cover (details of transits and exhibition periods), terms, conditions and exclusions as well as the claims procedure and complaints. As an exhibition organiser you can make it a term of the hire agreement that the hiring venue provides a copy of their insurance certificate in advance of the exhibition’s dispatch to them (ideally two weeks before, to provide time to make alternative arrangements if cover is not sufficient. Again, as an organiser, if you have borrowed objects from a private individual or another organisation for inclusion in the tour, it is essential that the lenders agree the cover and are happy with the exclusions.

The values to be insured must be agreed according to a schedule drawn up by the organiser before the insurance is placed. Values are usually specified in the Loan Agreement between the lender and the organiser (or, at a less formal level, on a consignment note). Once they are submitted to the broker and/or insurer, they become ‘Agreed Values’. This will avoid any disagreement about the value(s) in the event of a loss.

Knowing that the terms, conditions and exclusions are appropriate for the type of exhibition being organised is paramount. From the beginning it is essential that an “All Risks” policy is provided and that it is on a “Nail to Nail” basis; i.e. the moment an item is collected from the lender until the moment it is returned. The terms, conditions and exclusions will be the same even if the exhibition travels abroad, and the policy will be subject to English or Scottish law and legal jurisdiction (as appropriate).

An “All Risks” policy will list exactly what is excluded. If a scenario is not specifically excluded, then it is fully covered. The following are some of the standard exclusions:

• Natural ageing, gradual deterioration, inherent defect.
• Repair, restoration
• War
• Confiscation, nationalisation, requisition
• Nuclear radiation, contamination
• Losses from unattended vehicles
• Losses when items are not professionally packed and transported
• Terrorism

Claims for terrorism losses during transit should always be specifically included, and the standard clause that provides this cover is the Termination of Transit (terrorism), JC056. Unless, of course, the lender is happy not to have this cover, claims for terrorism losses during an exhibition showing should be included, usually for an additional premium.

Exhibitions in an external location will commonly attract exclusions that remove cover for loss or damage as a result of theft and/or vandalism. It is up to the broker to negotiate with insurers to re-instate this cover. However, it may be that a higher excess is applied in such a situation or, indeed, a higher premium is charged.

The broker must ensure that Rights of Recourse and/or Subrogation against the organisers, packers, transporters and/or their agents are waived, which means that the insurers give up their legal right to sue these people/organisations in the event of claims caused by their negligence.

The Government Indemnity Scheme (GIS) was introduced by the National Heritage Act 1980. It is managed by the Arts Council England (ACE) and is a non-commercial insurance programme providing cost-free indemnity cover against loss or damage to works of art and objects on loan to national and non-national museums, galleries and libraries.

This means that these organisations can borrow objects from other non-national institutions, private lenders and from lenders abroad and, in the event of loss or damage while on loan, compensation will be paid to the owner by the government. The GIS encourages institutions within the UK to mount important exhibitions and to borrow objects to complement their existing collections, without incurring the cost of commercial insurance. By providing borrowers with this alternative, it ensures that the public has access to many works of art and objects within the UK, access which might otherwise be unavailable.

The GIS enables thousands of objects to be exhibited around the country and in cash terms it has real value. At a notional rate of 0.5%, a common commercial insurance premium, it saves museums around £15 million a year. Most importantly, it facilitates loans, and allows improved exhibitions and long-term displays, giving the public further opportunities to see a wide range of objects in museums, galleries and libraries throughout the UK.

Any institution, museum, gallery or library to which the public has access is eligible for indemnity cover. These include national museums and galleries (government-funded bodies) and non-nationals (local authority and university funded bodies, National Trust properties and independent museums and institutions).

Almost any object to which the public has access may be covered if that object contributes materially to public understanding and appreciation. The GIS is not fine-art biased and does not only cover loans from the UK but also from abroad.

The GIS can cover loans ‘nail to nail’ i.e. whilst they are in transit to and from the borrowing venue, in storage, setting up, display and dismantling. Exclusions are:

(a) war cover,
(b) negligence by the owner,
(c) conservation,
(d) the condition of the object at the time of loan, and
(e) a third party claiming title to the object.

Non-national borrowers should make an application to ACE three months in advance of the requested indemnity start date. For national borrowers, the lead in time is five days for each complete application.

All of the information requested on the forms should be submitted to ACE as this will help to ensure that indemnity is arranged in time. Otherwise there may be delays. ACE then considers whether the loan is in the public benefit and if public access will be available throughout the display period. It will also consider the security arrangements, environmental control provisions at the borrowing venue, and the valuations of the objects for which indemnity is being sought. You should be prepared to provide any further information in support of your application that may be required by ACE.

To encourage continuing responsibility by borrowers and to eliminate small claims, the GIS has a minimum liability clause.  This is up to a limit of £300 for objects valued up to £4,000 and £300 + 1% of the total value of an object valued above £4,000. Borrowers with national status and those with Designated collections – those identified as being of outstanding importance by the Designation Scheme – must meet an annual minimum liability of £5,000.

Further information about the Government Indemnity Scheme: http://www.artscouncil.org.uk/protecting-cultural-objects/government-indemnity-scheme (link updated 2017)

National Touring Exhibitions are managed by the Hayward Gallery, which makes the application for indemnity on behalf of all the venues. For all other touring exhibitions, the following procedures apply:

• A separate application from each venue should be submitted to ACE, including a list of loans with valuations, and details of security arrangements and environmental control provisions. Each application should be sent three months in advance of the indemnity start date at each venue. Please inform the GIS team that the exhibition will be touring.
• Borrowers should not include items from their own collections as they will not be eligible for cover. Similarly, items from national collections should not be included as they are lent at the risk of each national.
• Valuations will be checked with ACE’s expert advisers in conjunction with the first venue’s application. Images of loans do not need to be sent with other venues’ applications unless the loan list differs from the first venue.
• In addition to the display period, each venue should take responsibility for installation, storage and one leg of transport.
• The first or last venue should agree to accept responsibility for two legs of transport to include transit from or to the lenders. The organiser may opt to be the first or last venue but agreement should be reached on this beforehand. Please inform the GIS team of which legs of transport the venue applying is responsible for.
• Standard conditions of indemnity require that condition reports are carried out and updated at each venue. They also require the borrower to provide relative humidity, temperature and light level readings for the galleries in which indemnified objects are displayed. This information should be for the first and last weeks of the display period and should be submitted to ACE immediately after the first and last weeks of display. Provision of additional information may also form part of the conditions of indemnity depending on the nature of the material being borrowed.

ACE will keep you updated during the processing period and will let you know as far in advance as possible if your application has been successful. If there are problems with the application and these are not resolved within the three-month period, ACE will aim to arrange for indemnity to start as soon as possible thereafter.

Third Party Liability (also known as Public Liability) Insurance provides cover against claims for loss and/or damage to members of the public as a result of negligence by the organiser and/or the venue.

Employer’s Liability Insurance provides cover against claims for loss and/or damage to staff as a result of negligence by the organisers and/or the venues.

These forms of cover will rarely need to be arranged on a temporary basis, as all venues will almost certainly have this cover available, and anyone organising an exhibition should utilise the cover already in place. Independent curators should inquire early on in their planning that the venues to be used have suitable third party and employer’s liability cover, which they can use. If not, they should discuss with their broker the suitable course of action to take.

The broker must be advised of any particularly unusual exhibits or activities, including outdoor exhibitions of sculpture or events and activities “off-site”.

In their turn, venues should bear in mind that an organiser may have a very different space and facilities, or even no exhibition area at all, and may have a very different clientele. It is therefore very important for the venue to assess the safety of the public in relation to the incoming exhibition, using its own criteria and its experience of visitors in its spaces.

The most likely problem areas are when exhibitions are in non-gallery spaces or public thoroughfares and fire exits, or when they involve workshops, public demonstrations or interactive displays or use water, electricity and/or chemicals. The following examples are solutions to just a few of the more common areas of risk:

• Barriers should be placed to keep people away from exhibits that are unstable, have sharp points or contain water, fire, chemicals or other harmful substances (e.g. lead)
• Display cases and screens should be adequately anchored so that they are able to withstand the force of an adult collapsing against them
• An exhibit on a plinth should be secured so that it is able to withstand the force of a child running into the plinth
• Suspended exhibits must be secure, and the area below isolated, and suspended clear displays of Perspex or glass must be clearly identified
• Any exhibit using electricity must be earthed with approved earth-leakage protection
• All electrical equipment and artworks/objects requiring power must have been PAT tested
• Cladding should be treated with a suitable fire-resistant paint
• No displays should be installed in positions where people may easily fall or trip into them, e.g. at the bottom of stairs or even below a single step

While it may not be the responsibility of organiser and venue to provide cover for work by external contractors, it is their duty to use bona fide contractors and to ensure that the company has the necessary cover in respect of exhibitions in public spaces. This should apply to all contractors, whether they are designers, electricians, builders, technicians or other trades.

Any self-employed person working in an institution – whether a technician installing an exhibit or an educator leading a workshop – must have public liability insurance cover. Only in the case of such persons carrying out detailed and specific orders which allow no interpretation, will liability for any harm or injury rest with the institution. For example, liability rests with a self-employed person who is simply told to put a three-pin plug on a lead; it rests with the institution if its staff specify which coloured wire goes to which screw. Should such individuals not have suitable insurance cover, it is normal practice for the institution to take them on to the staff in an employed capacity – even if only for half a day – so that they will then be covered by the institution’s own policy. In the case of a claim and subsequent discovery that such self-employed persons have no insurance cover, liability may fall on either the organiser or the venue. It is therefore essential that such provision is checked by both parties at the outset.

The minimum sum insured for Third Party Liability should be £2,000,000 and Employer’s Liability will always be £10,000,000.

The broker must be informed as soon as reasonably possible of any claim or of any circumstance, which may subsequently give rise to a claim, and the police must be notified if a crime is suspected. As an exhibition organiser you can stipulate in the hire agreement that venues must inform you of any incident within a specific time period, such as 24 hours, to ensure the situation and claim are handled appropriately and in a timely manner.

Under no circumstance admit liability for or agree to settle any claim, or incur any costs without the broker’s and/or insurer’s written consent. A specialist loss adjuster who acts for the insurers will usually be appointed and details of the loss, including the item(s), its value(s), how the loss occurred and any other relevant information will needed to be provided to them.

The broker’s duty is to ensure that the claim is settled quickly and efficiently and above all satisfactorily for the lender/owner. This may require negotiation on claims such as loss in value (depreciation). These can be complex claims and, by using a specialist fine art broker, exhibition organisers will ensure that specialists (loss adjusters, conservators, restorers, and lawyers) are used at every stage in settling a claim.

Authors: Adam Prideaux (2005), updated by Charlotte Dew (2015)
Carol Warner: Government Indemnity Scheme (2015)