So, you’ve got a collection of fine wine. Chances are, it was time-consuming and expensive to curate. Whether you plan to sell it in the future or fully intend on drinking every single bottle, you should look into protection for your investment.
Life has a funny way of being unpredictable, and that unpredictability can be unhealthy for your wine. A hurricane floods your cellar. Someone uses the five-finger discount on your favorite bottle of Bordeaux. The person transporting your wine sneezes at the wrong time and drops a crate down some stairs. These things happen, but that doesn’t mean you have to suffer. Getting a good insurance policy for your wine can help make the unpredictable loss against your collection less costly.
I worked with several clients after the 2017 hurricanes in Texas and Florida and the biggest cause of loss was due to heat exposure. Even cellars with generators experienced problems. In 2 cases the generator failed causing the wine to be in an environment with 80+ degree temperature for multiple days which is enough to affect wine, especially older vintage wine from regions like Burgundy or Champagne. Even with the best disaster plan in place, insurance is the best starting point for a worst case scenario.
The rule of thumb is, if your collection is above $10,000, you should at least look into adding a valuables article policy to your home insurance. With a Blanket Coverage policy, an appraiser values the entire collection to recommend a single value to ‘blanket’ it. Most policies are affordable and run in the range of $.50 to $1.00 per $1,000 of value, depending on the level of insurance. Bottle by Bottle coverage, recommended if your collection is more than $10,000, considers not just the market value of an individual bottle, but the possible projected loss of it as well, potentially allowing for better compensation on your more high-end wine. Most policies have a per bottle maximum, (i.e. $5,000), which is often well above the average bottle in a collection.
When you’re looking into a policy, there are several things you should consider:
The wine market is always changing, so your collection should be appraised regularly (WineAdvise offers USPAP certified appraisal services, click here for more information).
Keep track of your inventory. Bottle by bottle accounting is not necessary as most blanket policies have a buffer, however if high value wines or quantities are bought, drunk or sold, your provider should be alerted.
Home cellars are difficult to maintain (for more information on cellar requirements click here), but third party vendors aren’t infallible either! Although third party vendors are likely already insured, you need to understand their policy as they may not have true all-risk coverage and only cover a small portion if they are at fault.
A lot of wine breakage happens in transit, so get your wine appraised as soon as possible. That way, if it ends up damaged before it reaches its final destination you’re still covered. But make sure your policy covers in transit.
Still, the best kind of insurance policy is the one you never have to use. In the event of a predictable natural disaster, such as a hurricane the news has been warning you about for weeks, the best thing you can do is move your wine to a cellar in an unaffected area. It’s expensive, but if you have the time, it is the surest way to protect your investment.
If you live in high-risk area there are proper precautions to mitigate the effects of a disaster:
A cellar above ground will not flood as easily
Seismic latches can be placed on wine cabinets to anchor them down in the event of an earthquake
Avoid areas where there are vibrations in your home, such as near heating/cooling units or large appliances
Have a generator that can keep your climate control in place for 7 days in case of evacuation or long term power outages, as heat is the biggest enemy of wine
Have a wine evacuation plan in place. Even if you don't want to store an entire collection at an offsite facility, it's a good idea to have an account with one and store a few cases. In the event of a potential catastrophic event, they will be more willing to work with existing clients
Have a complete inventory and current valuation if specific bottles are affected
In the end, wine is just like any other valuable, and any serious investor should put significant thought into protecting their collection.