How to Insure Fine Wine

Wine collectors invest a significant amount of time and money into building their collections. Fine wines are often passed down through the generations, and their value increases with age.

Much like art and fine jewelry, fine wine is a substantial financial asset that requires protection. Wine insurance provides coverage in the event of damage, theft, or spoilage.

An average bottle of wine may cost just $20 at a local shop, but a collectible 1982 Lafites starts at about $8,000 at Sotheby’s Wine Auction (set at $65,000 in Hong Kong dollars), and a 1959 Romanée-Contis costs over $18,000. At resale values this high, a wine collection of only 100 to 200 bottles could be worth seven figures.

Hence, deciding on the right wine insurance is very important for serious collectors. Coverage options, claims processing, and add-ons for spoilage and spillage can differentiate a good policy from a great one.

Different Types of Wine Insurance

Wine insurance policies vary by type and level of coverage. Here are four common options.

• Damage coverage: Damage coverage protects against financial losses if wine is damaged due to natural disasters, fire from electrical failures, water from plumbing issues, extreme weather events, accidental breakage from improper storage or handling, and breakage during transit or shipping.
• Theft coverage: Theft coverage protects against losses if wine is stolen through burglary or robbery of a home, business, or storage facility. This may also cover mysterious disappearance; i.e., if bottles go missing without any explanation. Similarly, it protects against fraud during sales or trades and theft while wine is on display or consigned.
• Spoilage coverage: Spoilage coverage provides protection when heat, cold, power failure, or mechanical breakdown damages or destroys your wine. This includes excessive temperature fluctuations, power outages disrupting climate control, refrigeration equipment failure, and poor storage conditions that lead to seepage or corking issues.
• Transit coverage: For collectors who frequently ship wine, transit coverage insures against breakage, theft, and/or temperature damage during transport for sales, trades, or general shipment.

What Else Does Wine Insurance Cover?

In addition to the above ways that insurance will cover the unexpected, you may want to consider the following coverages as part of your fine wine insurance policy.

• Replacement-cost coverage: To replace rare and valuable bottles
• Agreed-value coverage: For wines with set appraisal values
• Collectible components coverage: For bottles, labels, capsules, boxes, and other collectible components
• Cleanup coverage: Removal of debris and cleanup costs from a covered loss
• Appraisal fee coverage: Payment of appraisal fees needed to resolve claims
• Worldwide coverage: For international collectors
• Auction and display coverage: Coverage for damage and theft for wines displayed at exhibitions or auction houses

Do I Really Need Wine Insurance?

For the average consumer with several bottles stored in a home cellar, wine insurance is not a necessary expense. The Horton Group recommends covering a collection worth $85,000, though it also suggests that “you may wish to begin insuring well below that value.”

The financial risks posed by damage, theft, and spoilage make the cost of insurance worthwhile. Those with climate-controlled cellars may consider this protection more seriously, because any faulty equipment could result in the entire collection being ruined. Similarly, those who have inherited a collection may have both a sentimental and financial incentive to insure their collection for the benefit of future generations.

Factors to Consider When Choosing Wine Insurance

When selecting a wine insurance policy, there are a few key factors.

• Coverage limits: Choose limits adequate to cover the full collection value. Alternatively, consider per-bottle limits, which typically range from $1,000 to $25,000 each.
• Deductibles: As with any other insurance, deductibles range. This is the upfront cost that the insured pays on any claim before the remainder is covered by the insurance company. A lower deductible, like 2% to 5% of loss value, can reduce out-of-pocket costs in case of an incident. Higher deductibles, 10% and up, will cost the insured more at the time of a claim, but recurring monthly premiums will cost less over the life of the policy.
• Exclusions: Excluded risks vary. Read the fine print and expect that loss or damage for incidents such as war, nuclear accidents, ordinary wear and tear, and gradual deterioration may not be covered.
• Provider reputation: Select an established insurer known for wine expertise and fast claims processing. Big names in the wine insurance space include American International Group (AIG), Chubb, Horton, and Pure.
• Premium costs: Compare quotes to find the right balance of premium affordability and coverage.

How Much Does Wine Insurance Cost?

Premiums vary greatly based on the collection’s value and risk factors. It costs anywhere from 40 cents to 80 cents to insure $100 worth of wine, so if your collection is worth $100,000, the annual premium could be anywhere from $400 to $800.

However, there may be additional costs depending on how frequently the bottles are moved (transit), the conditions in which they are normally stored (climate-controlled or not), and where the bottles are located (United States, abroad, and/or seasonal risks in storage locations). These factors and a combination of factors determine the final cost of each policy.

How to Insure a Wine Collection

The first step in insuring a wine collection is to inventory the collection by detailing wine types, year, origin, bottle sizes, values, and storage locations. Hobbyists may already have a ballpark figure from searching on online sites, such as wine-searcher and Wine Owners, for comparable bottles.

Others may want to get an appraisal to establish value for rare or expensive bottles. While many insurance companies will not require you to conduct an appraisal before offering an insurance product, it is wise to do your own due diligence. With an independent appraisal, you can learn a lot about your collection—especially if you inherited it—and learn more about resale and replacement values, in addition to just insurance coverage needed.

After obtaining generic quotes from multiple specialized wine insurers, compare coverage terms and pricing before selecting the best policy.

Complete the chosen insurers’ applications and provide inventory documentation to get an exact quote to determine the best option. Before paying the premium to activate coverage, ask how easy it is to expand coverage as you continue to acquire more wine, confirm whether the policy will pass on to other inheritors of the collection (or just the person who originally signed up for it), and ask who else might need to be named on the policy, such as a sommelier, an estate or a trust manager, or a family member.

Once you make a selection, store your policy documents safely in physical and digital formats. Maintain the policy in good standing by updating the inventory regularly, tracking origin and acquisition documentation in an accessible place, and recalibrating values based on use and sales of comparable vintage bottles.

Tips for Filing a Wine Insurance Claim

If disaster strikes, wine insurance claims can be filed just as with any other insurance. Contact the insurance company immediately to explain the concern and circumstances.

Know that even your first call is being documented, so be careful not to speculate about cause or fault. Take reasonable steps to prevent further losses, such as removing unaffected bottles from a water-damaged cellar. Thoroughly document damage and losses with photos, video, and detailed written notes. Report any theft to the police and obtain a copy of the report to attach to the claim.

These days, many insurers use an online portal for document collection and claims communication, but others may still work best via phone or email. Ask about claim processing time frames, settlement options, and the right to appeal.

Work cooperatively with the insurer’s adjuster to determine and verify losses. This may include a site visit or other kinds of verifications. Keep records of all claim-related expenses that the policy covers. Pass on accurate bills and receipts to the insurance company as they arise.

The Bottom Line

It is easy to go from casual wine collector to connoisseur in just a few years. Also, inheriting a collection could put a layperson in the position of needing to safeguard what they now own. For large or especially valuable collections, insurance can safeguard wine investments over the long term.

Before signing up for wine insurance, however, it is best to properly document holdings, understand the coverage options, and choose a trusted provider. Insurance provides peace of mind that fine wine can mature safely with adequate financial protection from life’s perils.