Understanding Wine as an Insurable Asset Class:
Insights from Neil Kaplan on Proper Wine Storage and Appraisals
Summary:
As an insurable asset class and a consumer item, wine provides unique challenges for the collector and appraiser alike. Careful storage, great record keeping and experienced professionals are critical in consideration of the value and safekeeping of a large and/or rare wine collection. Thank you to Neil Kaplan, Managing Partner at the Cork Counsel. You can find him here on LinkedIn: neil-kaplan/
Introduction:
In a recent webinar titled “Damage and Loss: Wine,” Neil Kaplan, DipWSET, AAA, Cork Counsel, provided valuable insights into the unique nature of wine as an asset class, the importance of protecting wine from damage, and key considerations for appraising and assessing wines. Here, we delve into the key points discussed during the webinar to help collectors, appraisers, insurers and others in the wine industry.
Wine as a Unique Asset Class:
- Kaplan emphasized that wine is unlike traditional assets, as damage cannot be repaired, and there is no market for damaged wine. Loss is total, making it crucial for collectors to prioritize preservation measures.
- Disposing of wine can be challenging and costly, sometimes even considered hazardous material.
- Wine is dynamic and changes over time, requiring a significant investment of passion and knowledge from collectors.
Protecting Wine:
- Temperature control is crucial, with the target being around 55 degrees Fahrenheit to prevent fluctuations that can lead to cork damage and oxidation.
- Maintaining humidity at around 75% helps prevent cork drying and label mold.
- Storage should be dark, UV-free, and vibration-free, with backup generators in place, especially in professional storage facilities.
- Thorough documentation, including ownership, movement, storage history, temperature, and humidity control, is critical.
- Insurance coverage for wine collections requires a separate rider, with blanket policies preferred. Do not rely on a homeowner’s policy.
Assessment of Condition:
- When assessing wine condition, conduct a cosmetic inspection of key features such as oxidation, coloration, capsule, cork, label, sedimentation, and protruding corks.
- Utilize a powerful flashlight and photograph wine bottles for thorough documentation.
- Wine level should be near the cork but not touching, with off-colored wine indicating oxidation. Wine levels drop over time.
- Differentiate between normal aging processes and potential damage by considering factors like evaporation and alternate closures types and normal color changes. For example white wines can get darker while red wines can get lighter.
Types of Damage:
- Heat damage is the most common factor causing damage, with insulation and temperature control measures recommended.
- Cold damage can slow the aging process but typically occurs only at temperatures below 25 degrees Fahrenheit.
- Water or flooding can cause label damage and contamination, impacting wine quality.
Appraising & Assessing Wines:
- Changes in wine levels and color should be age-appropriate, with premature changes serving as warning signs.
- Look for seepage and consider marketplace conditions when appraising questionable bottles.
- Taste samples to assess collection damage, using different wines and styles from the collection. Different wines may be affected by an event in varying ways.
- You don’t need to sample the rarest and most expensive wines in the collection to gauge saleability. If possible use wines that can be replaced.
- Consider obtaining a similar bottle from outside the collection as a control
- Provenance is crucial for authentication, especially for rare wines prone to counterfeiting.
- Conditions should be checked frequently particularly after any know event such as a collection move or known hazard.