While high-net-worth individuals in the U.S. pay around $5 billion in annual insurance premiums, most are not buying coverage from providers that can adequately protect the full range of their personal property assets.
One frequently overlooked area involves cherished items hanging in a closet at home or packed in a suitcase when on the go: designer and couture (also known as made-to-measure) clothes, shoes, and handbags. These high-value fashions and accessories are wearable art — precious, bespoke, and sometimes one-of-a-kind pieces created with great care and precision in an atelier and moved into a closet to become part of a person’s private collection. With haute couture price tags reaching six figures, the value of an extensive fashion collection can extend into the millions, with a single piece costing as much or more than an automobile.
“Much like collectors of fine art, vintage cars, or wine, customers who invest in their wardrobes can be quite passionate about their acquisitions,” says Ron Fiamma, Vice President and Global Head of Private Collections for AIG Private Client Group.i
Couture wardrobes can leave collectors exposed
Designer or couture items are impeccably crafted by highly skilled hands to meet a person’s specific taste, figure, and stylistic goals, meaning they cannot be easily fixed or replaced if damaged. Many fashion aficionados and collectors mistakenly assume their couture clothing and accessory collection is covered by their homeowners insurance policy. While homeowners insurance may cover some major areas of home damage caused by a flood, fire, or another disaster, it typically does not cover high-value garments and accessories. And wily intruders like moths — capable of inflicting serious damage on delicate fabrics — are usually not covered at all by these policies.
Doug Greenberg, the owner of Garde Robe Online, LLC, the first museum-quality garment storage service for precious clothing, footwear, furs, and accessories collections, grew increasingly concerned when the majority of his clients declined the insurance policies his firm offered for clothes stored in its facilities.
When Greenberg learned that a client’s home — and the couture collection housed within it — was flooded by Super Storm Sandy, and the bespoke wardrobe was not covered by homeowners insurance, he approached AIG about creating a solution to fill the coverage gap.
AIG Private Client Group had also spotted the need for more precise protection. AIG risk managers often visit customers’ homes to help identify vulnerabilities that could lead to property damage if left unchecked. On one visit, the significant financial risk many individuals unknowingly assume became even more apparent when a risk manager came across a collection of 150 ultra-luxe designer bags, with a price tag of $20,000 or more per bag.
Bespoke protection for bespoke wardrobes
To develop a specialized coverage solution that meets collector realities and concerns, AIG underwriters visited designer studios and ateliers and interviewed Garde Robe’s clients to learn about the skill, craftsmanship, precision, and materials involved in the creation of high-end fashions — as well as the underlying passions and goals of the people who collect them.
“Just as a collection of vintage automobiles has different coverage needs than an everyday car in the driveway, we realized that couture and bespoke clothing needed to be safeguarded differently than ordinary household items,” Fiamma explains. “Very special fashions are wearable art collections that require comprehensive protection.”
In September 2015, AIG Private Client Group launched the first-ever wearable collections coverage — the only specialized insurance currently available to protect and proactively mitigate risks for high-value couture and designer wearable collections.
The comprehensive insurance addresses specific gaps in traditional homeowners policies, covering couture and ready-to-wear garments, shoes, handbags, and vintage and historic clothing, as well as custom, work-in-progress couture and shoes. It covers damage caused by flooding, moths, vermin, theft, and accidents, as well as the cost of moving items to a safe storage facility before an impeding threat — risks that are frequently excluded from a homeowners policy. If a piece is damaged or destroyed by a covered loss, dry cleaning and restoration by a high-end garment care specialist will be covered, a typical prerequisite for acceptance into a secure garment storage facility.
The coverage is in effect worldwide — wherever and whenever the policyholder chooses to travel with or wear their garments or accessories. The policy also includes services such as vulnerability assessments, emergency planning, and referrals to wardrobe-preservation specialists. In addition, AIG Private Client Group’s in-house collection management specialists work with clients to help them preserve the long-term value of their couture and designer collections.
The wearable collections coverage is available to individuals who are eligible for AIG Private Client Group’s solutions and services as an endorsement to the private collections policy, which includes additional advantages such as agreed value coverage, no deductibles, and loss in value payments.ii
To learn more about AIG’s private collections policy — offering distinctive protection for fine art, wine, jewelry, couture, and any other items you prize — visit: https://www-200.aigprivateclient.com/index.php?Page=private-collections-insurance-coverages.
For more information about AIG Private Client Group — serving high-net-worth individuals with innovative, flexible, and customized insurance solutions — visit: http://www.aig.com/individual/insurance/private-client-group.
i AIG Private Client Group is a division of the member companies of American International Group, Inc. (AIG).
ii The wearable collection coverage is available today across the U.S., in all states except Massachusetts.
The content contained herein is intended for general informational purposes only. Companies and individuals should not solely rely on the information or suggestions provided in this article for the prevention or mitigation of the risks discussed herein.