I decided to thin out my collection and consigned $50,000 worth of Bordeaux to a major auction house. I signed the paperwork, a truck picked it up, and I waited for the check. Two weeks later, I got an email: “There was an incident in the warehouse. Three cases were dropped.” I thought, “No problem, they’re insured.” Then I read the fine print of the consignment agreement: “Seller assumes all risk until the hammer falls.”
Key Takeaways
- The “Gap” in Coverage: There is a terrifying gap between your house and the auction block. Your home insurance stops when it leaves your door. The auction house insurance might not start until they “formally accept” the goods after inspection.
- Consignment Fees include Insurance (Sometimes): Look for the “1.5% Insurance Fee” on your settlement statement. If you opted out to save money, you are self-insured.
- “Hammer Price” vs. “Reserve Price”: If it breaks before the auction, they usually pay you the low-end estimate or the reserve price, not the high “Hammer Price” you were hoping for.
- Buy-Back Clauses: If the wine doesn’t sell and they ship it back, the return trip is often uninsured unless you explicitly request it.
The “Why” (The Trap)
The trap is “Care, Custody, and Control.”
When you consign wine, you are entering a grey area of ownership. You still own it (Title), but they hold it (Custody). Many personal insurance policies exclude items “held for sale” or “on consignment” because that is considered a business transaction.
The Investigation (I Read the Contracts)
I reviewed the standard “Consignor Agreements” for 2026.
Sotheby’s / Christie’s
- The Terms: They generally charge a fee (1% to 1.5% of the final hammer price) for insurance.
- My Analysis: Pay this fee. It covers the wine at their estimated high value. If you waive it, you must provide a “Certificate of Insurance” from your own carrier naming them as “Loss Payee.” Most standard carriers won’t do this.
WineBid / Online Auctions
- The Terms: They often insure for the “Reserve Price” only.
- The Trap: If you set a reserve of $100 for a bottle worth $500 (to encourage bidding), and they break it, you get $100.
Comparison Table
| Scenario | Who Pays? | Payout Amount |
| Breaks on truck to Auction | Your Transit Policy (if you have one) | Appraised Value |
| Breaks in Auction Warehouse | Auction House (if fee paid) | Reserve or Low Estimate |
| Breaks after “Sold” but before pay | Auction House | Hammer Price |
| Unsold and breaks on return trip | You (usually) | Zero (unless insured) |
Step-by-Step Action Plan
- Read the “Loss/Damage” Section: Before you sign the Consignment Agreement, find the clause regarding liability.
- Do Not Waive the 1% Fee: Unless you have a commercial dealer’s policy, paying the auction house for insurance is the safest route.
- Photograph Before Packing: Take high-res photos of the fill levels and labels right before the shipper takes them. If the auction house claims “it arrived leaking,” you have proof it left your house perfect.
- [IMAGE: Photo of a dated newspaper next to the wine bottles showing good condition]
- Check the Valuation Basis: Ask the specialist: “If you break this tomorrow, exactly what dollar amount do you write the check for?” Get that number in email.
FAQ
Does my Umbrella policy cover this?
No. Umbrella is for liability (if you hurt someone), not for your own property.
What if the auction house goes bankrupt?
If you consigned the wine, it is legally your property, not theirs. It should not be seized by creditors. However, getting it back is a legal nightmare.