A crypto-investor client of mine bought $2M worth of physical art to diversify. He shipped it directly to a “Freeport” (a tax-free storage zone) in Geneva. He assumed his US homeowner’s policy covered it under “Worldwide Coverage.” He was wrong. The “Duration of Transit” clause expired after 90 days. When a sprinkler malfunctioned in the warehouse, he had zero coverage.
Key Takeaways
- The 90-Day Rule: “Worldwide” coverage is usually for temporary travel. Permanent off-site storage requires a specific endorsement.
- Warehouse Legal Liability is Weak: Storage facilities limit their liability (like movers) to pennies on the dollar. You must insure your own goods.
- Tax vs. Insurance: Freeports save tax, but they complicate insurance jurisdiction.
- Inspection is Impossible: If you can’t visit the art, how do you prove it was damaged during the coverage period?
The “Why” (The Trap): Territorial Limits
Policies define the “Insured Location” as your residence. They extend coverage to “Property Off-Premises,” but typically with a time limit (e.g., 30, 60, or 90 days) or a monetary limit (e.g., 10% of the total coverage).
Storing art permanently in a warehouse changes the risk profile. The insurer doesn’t know the security or fire suppression of that warehouse.
[IMAGE: Map of the world highlighting major Freeport locations (Geneva, Singapore, Delaware) and insurance jurisdictions]
The Investigation: I Called Them
I investigated how to insure art sitting in a dark crate in Delaware or Switzerland.
1. The Warehouse’s Policy
- The Offer: “We offer insurance for an extra fee.”
- The Risk: It is often a generic block policy. If the whole warehouse burns down, the limit might not cover all clients.
- Verdict: Better than nothing, but opaque.
2. Standalone Art Policy (AXA / Lloyds)
- The Offer: You schedule the storage facility as a “Named Location.”
- The Requirement: The insurer will demand a “COPE” report (Construction, Occupancy, Protection, Exposure) from the warehouse.
- Verdict: The only professional way to do it.
3. Homeowner’s Rider
- The Offer: Extending the home policy.
- The Limit: Most carriers will refuse to cover items permanently stored in a commercial facility, especially overseas.
- Verdict: Do not rely on this.
Comparison Table
| Feature | Standard Home Policy | Warehouse Provided Insurance | Dedicated Art Policy |
| Permanent Storage | No (Time limits apply) | Yes | Yes (Must list location) |
| Catastrophe Limit | N/A | Shared among all clients | Specific to you |
| Cost | N/A | High Markup | Market Rate |
Step-by-Step Action Plan
- Add the Address: Call your broker and officially add the warehouse address as a “Scheduled Location” on your policy.
- Request the Facility Report: Ask the Freeport for their “Facility Report” or “GRASP” report. Send this to your underwriter to prove the building is fireproof and secure.
- Third-Party Inspection: Pay an independent appraiser to visit the Freeport once a year to open the crate and verify the art is actually there and in good condition.
- Tax Compliance: Ensure that insuring the art in the US doesn’t trigger a “Use Tax” event if the art is in a foreign Freeport. Consult a tax attorney.
FAQ Section
What is a Freeport?
A high-security warehouse where high-value goods are stored tax-free (no customs duties/VAT) as long as they don’t enter the local economy.
If I move art to storage, does my premium go down?
Often, yes! Professional warehouses have halon gas fire suppression and armed guards. This is safer than your living room, so rates can drop by 30-50%.
Can I insure art in a self-storage unit?
Risky. Most insurers hate self-storage (Public Storage, etc.) because of poor climate control and security. They may charge higher rates or decline coverage. Use a dedicated Fine Art Storage facility.