Ms. Straus: Actually, its damage from a variety of causes not just damage in transit. In severe winter weather, it is not uncommon to see a lot of water damage claims to fine art. For example, excess weight of snow resulting in roof collapses and seepage of water from various sources including below grade seepage. During the summer we see water damage to fine art as a result of severe rains or air conditioners that leak and saturate walls along with the art that hangs on that wall.

Fire, smoke and soot also are major perils that we see on a regular basis. Improper packing or crating and poor installation are also common causes of loss.

I do not mean to minimize theft as an important cause of loss, but as I have written in various articles, there are ways to prevent theft through central station alarms, and through inspections by the insurance company of the premises to point out the weak spots in the security system.

What is much harder to predict is when a dealer who has been in business for many years, goes rogue and starts selling art on consignment in violation of his consignment agreements and or selling the works and not remitting the proceeds to the owners. This can become more prevalent during bad economic times.

Ms. Straus: The way museums purchase insurance varies and each museum, unless it is a governmental entity, makes those decisions based on their own assessment of risk taking. In the US, most museums are private not-for-profit organizations with a board of directors who make those decisions. Also, those decisions are made based on the size of the collection, the type of collection, and by the finances of the institutions. Major art museums are going to take a different approach than historical societies, or a natural history museum.

Many museums in Europe are state owned and therefore the decision making on risk transfer is not their own, but is directed through a governmental entity. There are also government indemnity programs that are similar to purchasing private insurance. However, generally when museums borrow from one another or from private collectors the risk transfer then is typically insured for the value of the loan amount.

When underwriting a museum, one considers the total collection and evaluates the exposures as a whole; one does not look at individual works by certain artists and decide that those are more attractive to a thief.

Ms. Straus: I am not surprised that items are flagged as stolen in pre-sale catalogues. The sheer volume that goes through the auction houses is so enormous and rapid. Very often these works have already passed through several owners before they reach the auction house, and these owners may indeed be “innocent purchasers”. I do expect, however, that the auction houses conduct due diligence investigations when they sense that there may be something wrong with the consigners or the work itself, whether it’s a question of illegal ownership or authenticity.