MANHATTAN (CN) – An art collector has taken its insurance broker to court because of the “dishonesty exclusion” that allegedly stands in the way of recovering a loss to its $42 million collection of Old Masters art.
Renaissance Art Investors, of Las Vegas, Nev., filed the complaint in New York County Supreme Court on Tuesday against North Shore Risk Management LLC.
“The broker’s deception has caused RAI to incur millions of dollars of damages as a result of RAI’s inability to collect insurance proceeds by virtue of the ‘dishonesty’ exclusion relied upon by both AXA and the courts to deny RAI insurance coverage of its art losses,” the six-page complaint states.
It was North Short Risk Management that recommended the AXA “corporate art policy” in question to Renaissance, according to the complaint. AXA is not named as a defendant. The complaint makes other description of the insured collection but to say that it is a “portfolio of Old Masters art.”
“The corporate art policy valued the art portfolio at the price RAI paid to acquire the portfolio, namely $42,197,660.00, and in the event of a covered loss RAI was entitled to receive in insurance proceeds the full purchase price plus 10%,” the complaint states.
Though the broker characterized the corporate art policy as “the best and most comprehensive art loss policy then available,” Renaissance it would have purchased the more-comprehensive, “all risks” art-loss policy had it known that such a policy was available.
Particularly of interest to Renaissance is a policy that does not contain the dishonesty exclusion, which is standing in the way of recovery on a loss that the collector has suffered, according to the complaint.
“In 2011, the Supreme Court of the State of New York, County of New York, declared that the dishonesty exclusion applied and, therefore, AXA was not obligated to cover RAI’s losses,” the complaint states. “The Appellate Division, First Department, affirmed that ruling; the New York Court of Appeals declined to hear a further appeal; and the United States Supreme Court denied RAI’s petition for a writ of certiorari.”
Renaissance notes that it had directed its “broker to obtain quotes for a comprehensive, ‘all risks’ insurance policy that would cover all possible causes of loss, including without limitation losses caused by RAI’s consignee, the Salander-O’Reilly Galleries, and/or that may occur during any time in which the portfolio was in another’s possession, custody or control, such as during the consignment period.”
Salander-O’Reilly Galleries is not named as a defendant to the action
“RAI explained to the broker that it wished to buy the peace of mind of knowing that whatever happened to the art portfolio – whether it was in RAI’s possession or in another’s custody – the art and any loss thereof would be fully covered by insurance,” the complaint continues.
The broker allegedly told Renaissance “that neither AXA nor any other insurance company would underwrite or issue a policy that did not contain certain exclusions, such as those set forth in the Corporate Art Policy.”
“In 2014, RAI learned that the broker’s representations were not true,” the complaint states. “In particular, RAI learned that during the relevant time period AXA actually had issued a more comprehensive ‘all risks’ art insurance policy that does not contain a ‘dishonesty’ exclusion to another insured.”
Renaissance is represented by Barry Slotnick with Buchanan Ingersoll in its complaint for damages.
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