How to Appraise and Insure Your Whisky Collection

You’ve amassed a collection of whiskies, properly inventoried every bottle—and if you haven’t, read this guide—and now you want to make sure that your investment is secure. It’s time to get an appraisal. Whether it’s for insurance purposes, or because you are selling at auction, an accurate valuation of your whiskies will be essential. And who knows? Your collection may be worth much more than you think.

Why Insure Your Bottles?

“Insurance is there to put you back in the same financial position that you were in immediately prior to an insured event happening, such as a loss,” explains Alexandra Richards, a private client development executive at Bruce Stevenson Insurance Brokers in Scotland. The company specializes in brokering private client insurance in the UK and has access to household policies that accommodate high-value wine and whisky collections. They also work with whisky brokers, independent bottlers, and new distillery owners to arrange their insurance needs.

As a specialist private whisky adviser, Richards recognizes the particular needs of clients dedicated to their collections. “Like all things of repute, scarcity, and exclusivity, collectible whisky cannot easily be replaced following loss or damage on a ‘new for old’ basis in the same way that a television can be,” she says. “It may take years to build up a similar collection again, searching auction sales and dealers on a global basis.” For this reason, it is important to appreciate how the insurance industry regards what your whisky bottles are worth.

How Insurance Companies Value Your Whisky

Just like with fine art and antiques, insurers in the collector market offer two bases of settlements when it comes to claims: agreed value and market value.

“At the point of purchase, the agreed value might be set at the purchase price, and if it was lost there and then, to replace it would be what you paid for it,” explains Richards, “However, in ten years’ time, its value could have significantly increased, and could cost you a lot more to replace it. Likewise, it could have decreased in value, which is why it is important to keep valuations up to date.” Agreed values are flexible and can be adjusted, she adds. “Agreed value allows you to set the value of the item in advance of a claim, and thus negates the chance of any argument around the value of the item after it has been lost.”

With the value of some limited edition whiskies doubling or tripling in the months following release, market value may better capture this fluidity. “Market value is an opinion about an object’s likely sale price if offered by a willing seller to a willing buyer at auction,” says Richards, explaining why this can sometimes be the more difficult route. “Since the auction process is open to all bidders, an auction sale is considered to be a measure of fair market value; however, sometimes the likely sale price is greatly exceeded, or not met, which then sets a new market value. As such, it can be unpredictable and therefore difficult to establish the market value of an item after a loss has occurred, especially if there isn’t a valuation to back it up. Agreed value avoids this and will assist in claims being settled quickly and efficiently.”

How To Conduct An Appraisal

Knowing the value of your collection is the first step to getting it insured. Here’s how to figure out what your whisky is worth.

Do It Yourself

Once you’ve inventoried your whisky, you can use online resources to do your own appraisal. For somewhat more common bottles, research recent prices at online auctions and Bottle Blue Book, although it can be a struggle to find values for obscure one-off releases and antique bottles. Know the numbers you’re looking at: some auction houses show hammer prices after a sale, while others add the buyer’s premium, which can hike the price by up to 25%. The hammer price represents the value of the bottle. Don’t forget to account for tax, storage, and shipping to derive the true cost of whisky’s market value replacement.

Be wary about basing market value on prices displayed by specialist rare whisky retailers, however. Their stock has been acquired from auctions, brokers, and private collections, and prices will be marked up accordingly to maintain margins. As a private collector, this is not usually a market value you could achieve at auction, making it invalid for insurance purposes. Keep in mind that market values are subject to geographical and currency variations: a great price in Hong Kong might differ from the hammer price in the U.S. due to differences in tax, duty, and auction type. Unless you have the wherewithal to send your collection elsewhere, your appraisal should be based on prices in your home country.

Get Help From An Auction House, Retailer or Private Appraiser

Auction houses are your best option for a free valuation, although their agenda is, of course, to persuade you to sell your bottles with them. But auction houses are well positioned to give you insights into the market. Retailers can also help in appraising a collection; however, they may cite a valuation based on their buying price (remember those margins), which may underestimate what your collection is truly worth. Alternatively, reach out to whisky clubs and groups with expertise in rare bottles. The L.A. Whiskey Society is a private club whose members have considerable experience in bottle verification and authentication. The Society offers valuation services for top-end collectors at no charge, providing your collection meets their specific criteria.

Share The Information With Your Insurer

Will insurance companies accept your own appraisal? “This depends on the overall valuation—we would if a collection were in the low tens of thousands and has been bought recently,” says Richards. “A DIY inventory, accompanied by full descriptions, photographs, and purchase receipts would be acceptable as evidence of ownership, provenance, and value.” If the collection were more significant, with high value individual bottles collected over a long period of time, then a professional valuation would be more appropriate. “Insurers and insurance brokers can put you in touch with a company that can undertake this for you, but it is the insured’s responsibility to make sure that the sum insured is correct,” she stresses. “It is not common practice for an insurer to appoint a valuer to appraise the collection on the insured’s behalf.”

Beware of Commercial Interests

Adopt a cautious approach with commercial appraisers and brokers if you’re thinking about selling, rather than valuing the collection for insurance. They may have a vested interest in acquiring your bottles, thus potentially clouding their judgment with conflicts of interest. Brokers will offer a valuation, but may offer a single price to move the entire collection to another client if they sniff a sale. Choosing this option over an auction could compromise the potential value of your whiskies. There is no recognized professional code of conduct or qualifications required to be a rare whisky expert working in valuations, according to Richards, so keep that in mind when engaging someone for this task and paying for their services. “Reputation and experience would be the key indicators,” she notes. What they charge depends on the complexity of the task and how far the valuer may have to travel in order to appraise your collection, though much of the work can be done by phone and email. “You could expect to pay £350 ($500) for the first hour and £150 ($210) per hour thereafter if the collection is fairly significant,” Richards says, though the costs would be lower if a personal inspection of the collection is not required.

Managing Your Insurance

To find the right insurer, look for those in your area that cover other collectibles such as artworks, luxury watches, and fine wine, and ask auction houses for advice. “You can buy around £100,000 ($140,000) of coverage for about £350 ($500) per annum depending on satisfactory risk information,” says Richards. Although Bruce Stevenson Insurance Brokers does not offer insurance outside of the UK, this is a useful ballpark figure, bearing in the mind that if the collection is housed in a commercial location it could cost more to insure.

“Whisky collections can be insured as part of your household policy, if you have the right sort of policy—one which is ‘high net worth,’” advises Richards. “This is often a more cost effective way of insuring your collection than on a standalone basis. It does depend on whether your other fixed assets such as buildings, general contents, fine art, antiques, jewelry, and watches warrant a high net worth policy.”

Know What Your Policy Covers—And Doesn’t Cover

In the insurance business, the intention is to provide every collector with peace of mind. “The policies that we arrange cover whisky collections on a worldwide basis, for all risks,” explains Richards. Bottles are insured while in transit, and insurers will cover new acquisitions from auction worth 10%–25% of the total collection’s value, as long as you tell them within 60 days and pay for the additional premiums.

Every insurance policy will have exclusions; for example, with whisky collections, coverage ceases as soon as the bottle is opened. “Loss or damage caused by inherent defect, wear and tear, gradual deterioration, insects, vermin, rust, corrosion, mildew, fungus, atmospheric or climatic conditions, or the action of light would not be covered,” warns Richards. “If damage was caused by extremes of temperature directly resulting from mechanical failure or breakdown of climate control units damaged by fire, lightning, a windstorm or an explosion, then coverage would apply. We wouldn’t recommend reducing the level of cover to ‘named perils’ only, such as damage from fire, lightning, earthquake and aircraft, unless there were a specific reason, but that flexibility is possible if needed.”

Maintain Up To Date Records

Once your insurance documents are signed, your coverage still needs active management. “It is important that any inventory or valuation is kept backed up off site,” says Richards. “If your home burnt down with your collection inside, you still need to be able to access these records.” In other words, don’t just keep one paper copy. Make an electronic file to store in the cloud and on an external hard drive, and keep it up to date with new acquisitions.

The whisky market can change rapidly, but it is up to you to take action to prevent yourself becoming underinsured. “It is the insured’s responsibility to make sure that their values are correct,” Richards says. “We would advise our clients to re-visit their valuations every three to five years; however, some markets like jewelry and whisky are changing more rapidly than that.” You can ask for an extended replacement cost provision to be built into the policy, which means the insurance company will pay out more than the amount insured providing your collection has been valued recently and the company notified of any additions. If your bottles experience a bull run, like with Macallan and Karuizawa this decade, then you may need to inform your insurers and update your valuations on a monthly basis.

Keep Your Whisky Safe

Your collection needs to be secure, with good quality locks on entry and exit doors and locks on accessible windows. “You are expected to take reasonable steps to protect your property against loss or damage, and keep it in a good state of repair,” cautions Richards. “In my experience, whisky collectors tend to be very good at looking after their collections. While security is important, your collection is more likely to be afflicted by accidental damage, such as a bottle being dropped or damaged in transit.” Store your whisky in a safe place, away from the high traffic areas of your home to avoid calamities.

Appraisal and insurance look like a big task, but it’s worth spending the time if you are serious about collecting. Finally, with your whisky stash protected, make sure you take time to enjoy it. Kick back, pour yourself a dram, and put your feet up. You’ve earned it!

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