This state is home to some of the most extensive and most valuable wine collections in the United States, yet some California collectors don’t know how to keep their collections safe.
I spoke to Tim Dadik, field sales manager with Chubb Personal Insurance and an expert in California-specific risks. Chubb is the country’s 12th largest home, auto, liability, and business property insurer with a personal side niche of catering to wealthy clientele with wine, fine art, and jewelry collections.
Tim says there are three questions people should ask themselves when considering the safety of their wine collection.
(1) Do you know its actual value? Ideally, the inventory should be digitized on CD, or recorded on paper with appraisals and detailed descriptions. However, since a wine collection is often in flux, with bottles frequently added, then deleted when drunk, and since the value of individual wines can fluctuate, insurers usually don’t require appraisals or descriptions of every bottle. Rather, the collection is insured for a blanket limit, say $75,000. Only special, very valuable bottles—for example, a bottle worth more than $10,000—must be itemized, photographed, and described. To avoid underestimating the necessary blanket-coverage limit, a professional appraiser is invaluable. Insurance companies such as Chubb don’t appraise, but have a network of people who do, and their services are relatively inexpensive.
(2) Does your homeowner’s policy cover spoiled, stolen, or broken bottles? A typical one does cover wine lost through fire, breakage, or theft. The caveat is the deductible. Also, if you have a serious fire, your home’s contents are reimbursed at only 50 percent of the dwelling value, and compensation for other home contents may use up the coverage before the value of a wine collection is reimbursed. Collectors should buy a complimentary “floater” policy or inland marine policy that provides first dollar coverage of a wine collection with no deductible. An inland marine policy is an all-peril risk policy with the exception of earthquake coverage in California (see #3). Coverage with a floater policy is also broader, and unlike a homeowner’s policy, includes any wine stored in an off-premise facility worldwide. The importance of this coverage was revealed in Orange County this year, when the owner of Legends wine storage facility in Irvine was convicted of stealing $2.7 million in wine from his clients’ storage lockers. Spoilage from a power outage (due to Santa Ana winds for example) or electrical and or mechanical breakdown, are also covered by an inland marine policy.
(3) Is your wine collection safe from an earthquake? The inland marine policy is an all-peril risk policy for most states, but in California, loss from earthquakes is not covered and requires a separate earthquake peril policy. Valuable wines should be kept in storage racks securely anchored to a wall, preferably one with no water pipes. In addition, the wine bottles should be protected by a restraint system that prevents them from flying out of the wine rack in an earthquake. One example of such a restraint system is offered at www.quakeguardian.com. Temperature controlled wine storage units with secure doors are also an effective solution.