The Price of Protest: How Activism Affects the Economics of Art Insurance

October 24, 2023

By Kouros Sadeghi-Nejad

Introduction

National Museum in Sweden, National Gallery of Art in Washington DC, Metropolitan Museum of Art in New York City, National Gallery in London, Louvre… climate protestors have been increasingly frequenting art museums.

On the morning of April 27^th , 2023, climate activists Timothy Martin and Joanna Smith of the Declare Emergency organization were indicted by a federal grand jury for their protest at the National Gallery of Art in Washington, D.C. Martin and Smith, alongside other unnamed conspirators of the climate group, targeted Degas’s Little Dancer, Age Fourteen (1878-1881), smearing paint on both its protective glass case and pedestal.^[1] In the indictment released by the U.S. Attorney’s Office in D.C on May 24^th, it was revealed that the individuals in question were charged with “conspiracy to commit an offense against the United States” and causing injury to museum property in violation of Title 40, United States Code, Sections 6303(b)(2):

Touching of, or Injuries to, Property.—It is unlawful for anyone—to . . . in any way injure any object of art, exhibit . . . or other erection or architectural feature . . . within the specified buildings or grounds.

This incident adds to a growing number of climate-related protests aimed at high-profile artworks across various global museums, which have led stakeholders in the art world to reevaluate their risk management strategies and insurance coverages for potential liabilities associated with these mounting threats.^[2]

Acts of Defacement as Protest

The tactics employed by the protesters vary widely, from splashing paint and throwing soup to attempting to glue themselves to the art.^[3] For the most part, these acts have caused little to no physical damage to the targeted works, largely due to the activists’ use of easily washable material and their aim to raise awareness rather than destroy valuable art.^[4] Notwithstanding, the increasing prevalence of such protests suggest that it is simply a matter of time before security measures fail to prevent an irreversible situation, resulting in actual damage. Perhaps of more concern is the idea that through these demonstrations, malicious groups may see the susceptibility of these assets to vandalism, thereby encouraging them to capitalize on the opportunity to cause harm.

Indemnification in Art Insurance

Artworks housed in national collections usually enjoy the protection of government indemnity schemes. As for commercial museums and galleries, particularly those with significant collections in the United States, art insurance is the backbone of their risk management strategy.^[5] In the context of commercial property insurance, the insured party, whether they be collectors, museums, or lenders, must have an “insurable interest” in the property to be eligible for compensation in case of loss.

Indemnity provisions, often in the form of “first-party coverages,” ensure that the insured is returned to the financial position they were in before the loss occurred. Art insurance policies commonly operate on an “All Risks” framework—covering a wide range of hazards such as fire, water damage, theft, natural disasters, and accidental damage—that usually includes specific exclusions.^[6] Therefore, if a loss occurs that isn’t explicitly excluded by the policy, it is generally covered. When damage occurs, policyholders must promptly notify their insurance provider, initiating a claims investigation. The provider will then conduct an investigation to determine if the damage aligns with the coverage provided by the policy’s terms and conditions. If the policy covers the loss, the insurer indemnifies the policyholder by providing financial compensation to repair or replace the damaged work.

Terrorism Insurance as a Consideration for Politically Motivated Acts

The political nature of climate activism targeting art further complicates insurance negotiations by calling into question the scope of coverage and liability for politically motivated acts of violence. Typically, vandalism is covered under standard commercial property insurance policies for artworks. This type of insurance specifically covers deliberate destruction or defacement of property. To safeguard against more extreme risks, such as acts of terrorism, a different kind of insurance becomes necessary. Terrorism insurance operates in a more specialized context and is either offered as a standalone policy or as an add-on—known in the industry as an “endorsement” or “rider”—to standard commercial property insurance policies.^[7] The acts covered usually involve premeditated, politically motivated violence.

Recent climate protests deliberately avoid damaging artwork during their demonstrations. If, however, these activists—or a more malicious group inspired by their tactics—escalate to intentional destruction or significant defacement of artworks, insurance companies might classify such incidents as acts of terrorism rather than mere vandalism. This could trigger terrorism-specific insurance policies and further complicate claims and liability assessments, as the burden of proof regarding the political intent behind the act would need to be established. Under the federal Terrorism Risk Insurance Act of 2002, commercial property insurers must offer terrorism coverage as an optional rider to policyholders. This legal framework was enacted as a post-9/11 measure to ensure federal government assistance to the insurance industry in the event of a catastrophic event exceeding $100 billion. Ben Tucker, head of U.S. terrorism and political violence at AXA Insurance, defines the scope of coverage for acts of terrorism and political violence to encompass sabotage, riots, civil commotions, malicious damage, and even war or civil war.^[8] This broad and somewhat opaque definition raises questions for legal advisors and art professionals over whether this area of insurance is worth the added expense.

While terrorism coverage has been a standard clause for international art loans, it is not necessarily the case for domestic transactions in the United States. According to New York art lawyer Ralph Lerner, “Whenever I negotiate a loan agreement of an object to a museum in another country for a client, I insist on terrorism insurance, and I do get it.” Be that as it may, Lerner adds that “Negotiations for loans to U.S. museums is another matter. Museums here don’t want to offer terrorism coverage to lenders, and clients seem to be flexible about that, especially if they want their items in a show.”^[9] This very well could change in light of recent occurrences. The ease with which activists are able to access and target artworks has made some consider whether the museums have taken ‘adequate precautions,’ as part of a “Warranty Clause,” a common condition in many commercial property insurance policies. These could include having a certain guard-to-visitor ratio, installing vibration detectors, reinforcing works with a protective casing such as UV plexiglass, and utilizing advanced alarm systems that could help mitigate the risk of vandalism. Failure to meet this condition could result in partial or complete declination of a claim.

Minor Damage, Major Consequences

The climate protests may not have damaged affected artworks substantially, but they have inevitably altered the risk profile for insuring these culturally significant and fragile works, which could lead to an increase in premiums. Case in point is the incident involving activists from Just Stop Oil, who hurled tomato soup at Vincent van Gogh’s Fifteen Sunflowers (1888) in the National Gallery in London in October 2022. The art itself was behind protective glass or screening and remained unharmed, but the frame suffered minor damage. Though this might appear inconsequential at first glance, the implications are far-reaching, especially from an insurance perspective. Filippo Guerrini Maraldi, head of fine art at broker Howden, pointed out that even if the artwork is not directly impacted, the associated restoration costs, including repairing frames and remounting pictures, can run into tens of thousands of dollars. Therefore, what might seem like ‘minor damage’ in the eyes of the public, or even the activists involved, has financial repercussions that can complicate insurance claims and result in higher premiums.^[10]

Conclusion

What is becoming evident is that the risk profile surrounding art insurance is undergoing a substantial transformation, demanding renewed attention from insurers, collectors, and art institutions alike. In a shifting climate—literally and metaphorically—insurers may see an opportunity—or a necessity—to adjust their pricing models. Artworks, once installed in a museum or gallery, were traditionally considered low-risk assets; the primary concerns were usually around potential damage during transit or accidental mishandling.^[11] If the security of artworks continues to come under scrutiny due to increasing incidents, the surge in art insurance premiums may become an inevitable and urgent reality that stakeholders can no longer afford to ignore.

About the Author

Kouros is a recent graduate from New York University’s College of Arts and Science with a BA in Art History and Political Science. Through his studies, Kouros has developed a keen interest in the intersection of law, politics, culture, and the arts. His current research interests focus on international art market regulations, fine art insurance, and copyright protection. Kouros is deeply committed to advancing legal education and advocacy for artists and art professionals so that those within the art world are adequately equipped and empowered to make well-informed decisions in an ever-evolving global landscape.

Bibliography:

Cohn, Carolyn, Noor Zainab Hussain and Barbara Lewis, Activists Aggravate Art Insurers’ Climate Headache, Reuters, Nov. 25, 2022, https://www.reuters.com/business/environment/activists-aggravate-art-insurers-climate-headache-2022-11-25

Costandy Michael, Vivian, Esq., It’s A Risky Business: Why Insurance Matters In The Art Industry, Center for Art Law, March 24, 2020, https://itsartlaw.org/2020/03/24/its-a-risky-business-why-insurance-matters-in-the-art-industry/

Grant, Daniel, Should Art Be Insured Against Terrorism? The Industry Is Split, Observer, Aug. 7, 2018, https://observer.com/2018/08/should-art-be-insured-against-terrorism-the-industry-is-split/

Ho, Karen K., Climate Activists Charged After Protesting at National Gallery of Art – ARTnews, May 26, 2023, https://www.artnews.com/art-news/news/climate-activists-charged-degas-little-dancer-exhibit-national-gallery-of-art-1234669825

Ho, Karen K., Growing Claims from Climate Change Will Prompt Art Insurance Rate Increases, Experts Report, ARTnews, Nov. 30, 2022, https://www.artnews.com/art-news/news/art-insurance-price-increases-climate-change-1234646985/

Tucker, Ben, Emerging Risks to Fine Arts: Political Violence and Terrorism | AXA XL, June 11, 2014, https://axaxl.com/fast-fast-forward/articles/xl-insight-on-fine-arts-risks-from-political-violence

Schultz, AbbyArt Insurers Have an Eye on Climate Protests but Don’t See Immediate Threat in the U.S. | Barron’s, Dec. 5, 2022, https://www.barrons.com/articles/art-insurers-have-an-eye-on-climate-protests-but-dont-see-immediate-threat-in-the-u-s-01670260203

Wilkinson, Claire, Climate protesters’ attacks on artworks raise risk management, insurance concerns, Business Insurance, December 1, 2022, https://www.businessinsurance.com/article/20221201/NEWS06/912353907/Climate-protesters’-attacks-on-artworks-raise-risk-management,-insurance-concern

United States v. Timothy Martin & Joana Smith, 1:23-cr-00182, (D.D.C.)

Select Sources:

1. Karen K. Ho, Climate Activists Charged After Protesting at National Gallery of Art – ARTnews, May 26, 2023. ↑
2. Carolyn Cohn, Noor Zainab Hussain and Barbara Lewis, Activists Aggravate Art Insurers’ Climate Headache, Nov. 25, 2022. ↑
3. Claire Wilkinson, Climate protesters’ attacks on artworks raise risk management, insurance concerns, Business Insurance, December 1, 2022. ↑
4. Abby Schultz, Art Insurers Have an Eye on Climate Protests but Don’t See Immediate Threat in the U.S. | Barron’s, Dec. 5, 2022. ↑
5. Cohn, et al., supra note 2. ↑
6. Vivian Costandy Michael, Esq., It’s A Risky Business: Why Insurance Matters In The Art Industry, Center for Art Law, March 24, 2020. ↑
7. Daniel Grant, Should Art Be Insured Against Terrorism? The Industry Is Split, Observer, Aug. 7, 2018. ↑
8. Ben Tucker, Emerging Risks to Fine Arts: Political Violence and Terrorism | AXA XL, June 11, 2014. ↑
9. Grant, supra note 2. ↑
10. Cohn, et al., supra note 3. ↑
11. Karen K. Ho, Growing Claims from Climate Change Will Prompt Art Insurance Rate Increases, Experts Report, ARTnews, Nov. 30, 2022 ↑