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You need to insure your wine collection separately

Published Mar 5, 2022

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After a year’s hiatus, the prestigious Cape Wine Auction recently took place at Quoin Rock in Stellenbosch. Connoisseurs buying wines on these auctions for their personal collections are warned that the high prices these liquid alternative assets fetch present a unique set of risks and highlight the need for specialist insurance cover.

Under the gavel

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At the last Cape Wine Auction held in 2020, the top 10 bids raked in over R12 million. One of the biggest bids was half a million rand for a lot that included six bottles of Meerlust Cabernet Sauvignon 1975. This wine, regarded as a South African classic, was the first to carry the Meerlust label.

At the top end of the scale, in 2021, a 200-year-old bottle of wine originally destined for Napoleon broke a record when it was sold for almost R1 million at an auction.

Bertus Visser, chief executive of distribution at PSG Insure, advises: “It is of particular importance that these types of consumable alternative assets be counted as part of your accumulated wealth, and must be protect accordingly.”

When you invest in your passion

Wine, like cigars and other high-priced collector’s items, are an alternative investment class that is gaining popularity throughout the world. And with South Africa being one of the world’s top 10 largest wine producers, locals are in a unique position to take advantage of the potential of this investment.

Visser says most home contents policies do not make provision for expensive (and often consumable) commodities such as a wine collection. Therefore you would need a bespoke policies to ensure protection against various, rather unique risks.

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“High-value items such as wine, whisky and cigar collections that can be consumed, require highly sophisticated insurance policies with clearly defined parameters and terms. It’s important for individuals to have a clear understanding of what their policies cover, and what their risk exposures are,” he says.

What to consider

Valuable assets require comprehensive policies with a defined and bespoke set of terms. There are many things to consider that are specific to the relevant asset. In the case of wine, individuals may consider taking out coverage for theft, breakage, damage due to power outages, cellar faults or equipment failures, and breakage in transit.

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In one example, a client-couple of a PSG adviser put in an insurance claim for an expensive bottle of wine that was part of a prized collection. While looking after the couple’s residence, a student had consumed the bottle of wine, not being aware of its value. Had the couple not had the foresight to insure their collection, the sentimental loss they suffered would have been compounded by a significant financial one.

“Make sure that your adviser is equipped with all the necessary information to go through every eventuality with you before you take out a policy. Proper risk management and insurance planning is an essential part of sound financial management,” Visser says.

PERSONAL FINANCE

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