Case Study: Lessons from a Smoky Cellar...how a certified appraisal helped recreate a collection.
Updated: Mar 13, 2019
I recently helped a client in a situation that illustrated how much of a disconnect there can be between the wine collecting world and the insurance world.
The Problem: A wine enthusiast called me about a collection of approximately 1,000 bottles in a designated cellar that used to be a walk-in closet in his house with all the necessary climate control equipment for proper storage. There had been an electrical fire outside the house that badly torched the house, including a shared wall attached to the cellar, causing a great deal of smoke and heat to pour into the cellar. The wine collector told his insurance adjuster the wines were negatively affected by the fire and sought reimbursement. After several disagreements with the adjuster about the validity of that statement, the wine collector hired me to complete a certified appraisal of the cellar.
The adjuster didn’t have a background in wine or wine appreciation and consequently drastically undervalued the collection - he offered the equivalent of only $10 per bottle and even then, only those he felt were ‘visually’ affected such as charred labels. He was not aware how smoke (and heat) can affect a wine and completely ruin a bottle from the inside out.
The client had purchased an umbrella insurance policy but didn’t have a certified appraisal or even a detailed inventory of his wine collection. I went in to the damaged cellar and completed an inventory as well as an appraisal report to document the losses.
Protect your investment! In the case of a loss claim, adjusters will often just count bottles and offer a flat rate per bottle as compensation. Usually this number is nowhere near what even the most basic bottles in your collection are worth. In addition, any claim of more than $25 per bottle can raise red flags so you’ll need detailed documentation for your collection.
Get a certified appraisal and update it every 3-4 years or if you have major cellar changes such as major wine acquisitions or sales.
While the adjuster was focused on the outside of the bottle - assuming the wine was fine if there weren’t direct char/burn stains on the label, I could see that there was a very different story going on. Corks pushed in and leaking from the heat exposure…soot covered labels…lingering smoke stains throughout the cellar…water/fire-retardant damage from the firefighters as they doused the walls to quench the fire…all led to a complete loss of the cellar and the bottles within.
Q: Why do I need a ‘certified’ appraisal? Can’t I just do my own inventory on cellar tracker or a similar site?
A: If you end up in a legal matter such as insurance reimbursements, divorce proceedings, or bankruptcy, you’ll be required to produce an appraisal that will hold up in a court of law. Only certified appraisers are able to provide that type of report.
In my experience as an expert witness in the wine field for court cases, I can attest to how important having a ‘certified’ report can be to obtaining the result you deserve.
The Result: I was able to provide a detailed certified valuation and rationale as to the total loss of the cellar and as a result, the client was able to recover the full value of his wine investment - in this case about $53,000 worth, and start to rebuild what he lost.
Don’t let your investment go up in smoke - if you’re interested in getting your own certified wine appraisal or help you navigate protecting your cellar, I’m happy to answer any questions you might have. Cheers.