What Numismatic Auction Insurance Issues Relate to Consigning?

Most auction houses are extremely careful with a consignor’s material, and losses in transit, in storage, or during viewing are minimal. If you consign your collection to an auction house you need to know if you are protected by insurance, who is paying for that protection, and what will happen if there is a loss.

The most numismatic auction houses carry their own insurance coverage and you may, or may not be charged you for that service. Read your auction contract carefully. You will usually find a clause that says “The consignee (the auction house) shall insure all items while in its possession.” That means the auction house will carry the insurance and pay for the insurance.

Sounds simple enough, but what actually happens if a key item in your collection gets stolen or damaged during lot viewing? How much will the auction house pay you?

This can depend to a large extent on what value you assign to each item when you give the consignment to the auction director.

When you consign your material to an auction house be sure to get a signed receipt stating the “value for insurance purposes” of every significant item.

If an item is lost by an auction company before it appears in a catalog, that item should be replaced with one of equal value, or you should receive a check based on the value for insurance purposes that you and the auction house have agreed to (as indicated on your receipt of goods from the auction house). What you receive may be based on the number indicated on you receipt, but the insurance company may challenge the value indicated on the receipt if it has any doubts about how the insurance value was arrived at. One way to avoid this problem is to have a professional numismatist assign the values independently.

The same principals apply if an item is lost during viewing, but what happens if an item is damaged during viewing or shipping? Coins, or paper money in a third-party grader’s holders are usually not an issue here, but “raw” coins or paper money may be subject to damage.

If you have any questions about the way your lots will be handled during viewing, ask the auction director. Some companies will simply not allow items to be taken out of holders during viewing. Others will have a staff member personally supervise the showing of an item. The staff member will take the item out and put it back after it has been viewed. The issue of damage is rarely addressed in an auction contract, but it should be.

If an item is sold at auction and then somehow disappears, you should receive the full amount you were entitled to anyway.

When you consign a large and valuable collection to an auction house, be sure they carry enough insurance to protect you if the collection is stolen or lost. You can verify whether or not they have enough protection by asking them to furnish you with a certificate of insurance. Have the insurance company assign a pre-determined amount of insurance to specifically cover your collection. That way if there is a catastrophic loss involving the auction company, you get paid before any other claims.

Before you ship anything to an auction house, find out if their insurance policy covers items that are being shipped to them. If they have this coverage, your shipment will be protected while in transit to the auction house and the coverage will cost you nothing.

Be a wise consignor. Read your auction contract, read the Terms of Sale, and seek professional help if necessary. Contact us.