Your wine cellar is a labor of love - you've spent time, money and energy painstakingly researching, collecting and curating. So how do you protect your investment? A certified wine appraisal report might go a long way to protect your 'liquid' assets. Below I've outlined some general rules of thumb I've learned (followed by a cautionary tale in the next blog post) illustrating the importance of having a certified appraisal.
Why might I need a certified wine appraisal?
Many people think their regular homeowners insurance will cover their wine cellar, soup to nuts, but in most cases, cellars are just one property consideration in a claim and often an additional insurance rider or umbrella coverage under your home insurance for a wine collection is needed. These riders can be purchased at an additional cost or through a third party firm such as Chubb/AIG. Absolutely check with your insurance agent to see what and how much your policy covers!
If the worst happens and a catastrophe befalls your cellar, it's often more complicated than simply filing an insurance claim. Insurance companies require a 'disinterested third party' to inventory and quantify your collection to verify replacement value, so you'll need to find a certified appraiser who is also a wine specialist. And the best time to get an appraisal is before you end up needing it.
Insurance adjusters aren't specifically trained in 'specialty' collections such as wine, art, furs, etc. so you'll want to hire your own specialist appraiser to provide you with a certified appraisal and inventory. (Weirdly, there are not a lot of us out there!)
Some general numbers to help you decide if you need a certified appraisal:
If your cellar is more than 250 individual bottles you'll want to get them listed in a certified appraisal report and update it every few years.
If your collection includes a lot of high-value wines, insurance companies will want proof of what you paid for the bottle or its current value (anything more than $30 a bottle will usually require proof).
With this in mind, make sure the coverage doesn't limit the per bottle replacement value in a loss too, as it might have a cap, for example a ceiling of $100 for any one bottle. For those really special bottles you might need to carry separate riders, like those Grand Cru Burgundies, or First Growth Bordeaux, or the 30 yr Macallan Sherry Barrel Single Malt or any other high-valued cellar trophy.
If you think your cellar will be valued above $5,000, you'll definitely want to get a certified inventory and report. Coverage can be complicated in a loss - often insurance companies will only reimburse a percentage of the cellar based upon the structure value without a special rider or specialty umbrella policy.
If you have sold or plan to sell some of your substantial cellar, an appraisal will help streamline that process. Also, the insurance companies may consider a portion of your wine cellar as a business asset (which has it's own coverage limitations), so you’ll want to speak with your insurance agent about what your umbrella coverage includes or if you’ll need an additional rider for personal v. business assets.
Hopefully you’ll never have to use it, but a certified appraisal report is the best way to cover yourself and the collection you've worked so hard to create.
My next post is a case study around exactly this. If you have questions or need some answers, I can help. Thanks for reading.
