Working With a Gallery After a Disaster
11/16/2012 12:00 AM
When many New York galleries were flooded by Hurricane Sandy, hundreds of artists were faced with a situation dreaded by artists and galleries alike: dealing with all the issues involving the artworks that were damaged or destroyed by an unexpected event like a flood, fire, or other disaster. What should an artist do to protect his or her interests after such a devastating event?
Be Calm, Take Stock of the Situation
First, it is important to remember that the gallery owners are people who have just been confronted by a disaster and are probably even more confused and upset than you. They may or may not be in command of all of the facts and may not be very well-prepared for the situation. They may also be colleagues or friends with whom you have had a long-standing relationship, and who need your understanding and compassion. However, looking out for your own interests is not necessarily in conflict with the interests of the gallery. You should both want to minimize your losses, and prevent unnecessary damage to your artworks.
Let’s assume that you have an exhibition or consignment contract with the gallery that that they are responsible for losses while the work is in their possession (if you don’t, you should). Let’s also assume that the gallery has insurance to cover damage or loss of artworks in their care. According to business insurance expert, David Kotary, there are a number of ways the work could be insured. Most commercial policies cover a wide variety of risks but also exclude certain risks, notably flood and earthquake. In the case of a flood, the gallery may have purchased an add-on flood policy (purchased through a private carrier but underwritten by the National Flood Insurance Program). Or, it might have added a “bailees” form (an inland marine policy covering the property of others in their care, custody, and control) to protect the exhibiting artists’ work. Depending on the insurance carrier, such a policy may or may not cover flooding.
The bottom line is that the gallery owners may not know for sure if they are covered for your loss, and it may take a little time to know for sure. The best case scenario is that your art works are fully-insured for the loss, the gallery is prepared for an emergency like this, and is taking all the necessary steps to care for your work – possibly even hiring professional conservators to stabilize artworks. Next best is that they are not insured, but the gallery has the financial resources (and will) to adequately compensate you for the damage to your works. The worst case is that they neither have the proper insurance nor the ability to compensate you for the loss – and might even go bankrupt as a result of extraordinary losses. Determining the best course of action may require you to make an assessment the ability of the gallery to cope with the situation, emotionally and financially.
The Artist and the Gallery’s Insurance Company
"...I would advise the artist to put the gallery’s insurer on notice of the loss." - Insurance expert, David Kotary
What do you need to do to be sure you are in line for an insurance settlement, provided your work has been properly insured by the gallery? This is David Kotary’s advice:
“Unless the artist has a long, trusting relationship with the gallery or has an indemnity clause in his or her contract and has the assurance that the gallery has the fiscal wherewithal to make good his or her claim, I would advise the artist to put the gallery’s insurer on notice of the loss. Sometimes galleries (like any private enterprise) fear reprisal from their own insurer for putting in a claim (and often these fears are justifiable). They may have every intent on paying the artist’s loss but by the time all of the bills are totaled, either they realize they don’t have the funds or they discover they don’t have the expertise to actually adjust the loss, especially if some of the cost components are in dispute. Given that, I would almost always recommend that the artist assert his claim with the insurer. That then establishes the demand and requires a response. The artist too will have recovery capability through the state department of insurance if an allegation of “bad faith” were to be put forth. Obviously no such avenue exists if the artist simply relies upon the gallery for recovery. (Failure of the gallery to settle on its own would then require the artist to initiate civil litigation and unlike working with the state insurance department, civil litigation involves out-of-pocket expense to the artist).”
Protecting the Artworks from Further Damage, Repairing Damage that Has Occurred
Attorney advises artists to document all damage and make arrangements to remove artworks to a safe location.
Given the high degree of uncertainty that may exist about whether or not the artworks are covered for a particular loss or the ability of the gallery to adequately compensate the artist for the loss, what can the artist do to minimize the damage, assuming the works were not damaged beyond repair? Casey Summar, Executive Director of Nashville’s Volunteer Lawyers and Professionals for the Arts, recommends that the artist fully document the damage to the works with photographs and written descriptions of the damage, make arrangements to remove the artworks to a safe location, and take measures to stabilize the works and prevent further damage. The artist should prepare a dated inventory of all the artworks that includes the condition and outlines damages to each work, and if at all possible get the gallery to sign the inventory, releasing the work to the artist, and agreeing with the condition report.
Compensation for the Artist’s Expenses and Work
Keep a journal recording dates and all expenses and time.
It is actually a condition of most insurance policies that the insured take reasonable measures to prevent further damage to insured property, so the artist should have no argument from either the gallery or the insurance company on this score. The artist may want to consult a conservator about the stabilization and restoration of artworks, or undertake the work himself. The Studio Protector Salvage section has tips on both routes as well as resources for more information about cleaning and stabilizing artworks. If the artist decides to undertake all or part of the job, Casey Summar advises the artist to keep a journal or ledger that documents all dates, expenses, and time, and to further document the work with photographs.
David Kotary reiterates and elaborates on Casey’s point:
“First, the artist has every right to recover ‘expenses incurred to reduce the loss.’ This means for example, that if the artist has to buy plywood, nails or screws (or whatever) to protect his or her art from the possibility of any further damage, all of that represents money expended to help the insurer from having to potentially pay more…so the artist should keep track of that and include any such expenses in his or her request for compensation. Secondly, the artist doesn’t have to wait on the claims people but the artist should take good color photos of the damaged work. Further, since many art items are one-of-a-kind, the artist should begin to list the components and their value. That would of course include art materials, labor, profit and tax (if any). While normally the insurer (especially under the pressure of settling myriad claims) would not argue with the artist doing his or her own restoration, it is possible, and I’ve seen examples, where the claim person pays only for materials and not labor. The insurer’s fear is that the artist will build in unreasonable profit margins and unduly benefit. The artist might want to get an outside conservator’s estimate of repair and see if the adjuster is okay with simply paying the artist to do the work for the same or lesser cost.”
Removing your work from the gallery will also circumvent absolute, worst case scenario - that is the losses from the emergency cause the gallery to go bankrupt. Consignment laws vary from state-to-state, but there is a real possibility that your work could be sold to satisfy the gallery’s debts with other creditors. While a good contract may offer you some protection against this possibility, the return of the work avoids the issue altogether and the possibility of legal proceedings to establish ownership.
Your interests as an artist will probably be best served by assuming that all parties are acting in good faith and are concerned about your artwork, unless there is evidence to the contrary. If you can get your work to safety and prevent further damage everyone should come out ahead. If you can accomplish this in a way that can alleviate some stress rather than contribute to it, so much the better.
Recognizing that there is a possibility that you may not be fully-compensated for your losses, it would be prudent not to incur unnecessary expenses. At some point you may want to consult an attorney so you have clarity on the terms of your contract with the gallery and to ensure that you are doing everything necessary to protect your interests.
The Studio Protector has information on working with an attorney and getting free advice through Volunteer Lawyers for the Arts or other sources.
Casey Summar recommends this Consigning Your Arts and Crafts, from legal self-help company, NOLO.
The CERF+ website has a listing of legal resources for artists.