Catering Scotland

The valuation of prized whisky has been on the increase in recent years.  A Scottish market-tracker, Whisky Highland, claims that prices for the 1,000 most-prized releases of single-malt Scotches have risen around 175% since 2008, based on auction figures*.  In October last year, Bonhams in Edinburgh sold the most expensive bottle ever to reach auction in Scotland; the rare bottle of Glenfiddich single malt sold for £68,500, smashing the £25,000-£35,000 estimate. For those of us who are fortunate enough to own a valuable private whisky collection, it would be worthwhile to consider insuring one’s investment.

Alexandra Richards delves into the growing phenomenon of burgeoning whisky collections and valuations, and suggests a prudent insurance policy could protect unwary buyers from unwanted visitors.
Some people might reasonably assume that a whisky collection will be covered under a general home contents policy.  However, many household policies have low single article limits, meaning that they will not honour a claim for a single item that is worth more than, on average, £2,000 in value. Even then, the cover might not recognize the insurance needs that such a collection would warrant.

Here are a few considerations to take into account if your own whisky collection is a bit more eclectic than a couple of bottles of Bells and a 10-year-old Talisker…

Get it valued

The first and most important thing to do is to obtain an official valuation by a certified specialist. He or she will create a detailed inventory with photographs of every bottle. It is crucial to keep this inventory up to date, being sure to amend it whenever a bottle is bought, sold or even sampled. The valuation will help you establish the amount you subsequently insure the collection itself. Depending on the value of any individual bottle, the valuation may be needed in the event of loss or damage to quickly substantiate and evidence the value of those bottles that may be subject to a claim, thereby facilitating a quick settlement.

Storing whisky

Store the collection out of the sunlight and in a cool, dry place, off the floor. Storing whisky in direct sunlight can result in the whisky lightening in colour and the labels fading.  Many people store their wine and whisky collection together, often in a basement or cellar. These can be prone to flooding which is why it is important that the collection is raised from floor level.  A flooded cellar will detach labels (the most important single element of identification of a whisky bottle) and diminish their value.  However, with the correct insurance provision, the cost to restore the label, plus any subsequent depreciation in the collection’s value would be met. One insurer dealt with a claim where wine labels were eaten by snails that had crawled into the cellar. Since the product itself – the wine – wasn’t damaged, a standard household insurance policy would not have paid out. Naturally, the same could quite easily apply to a whisky collection.

Worldwide cover

A specialist policy would ensure that your whisky is covered, no matter where it is stored.  You could house the collection at home or in a bonded warehouse. If buying from auction or direct from a distillery, the whisky is automatically insured upon purchase for up to 60 or 90 days, providing the insurance broker is made aware of it within that timescale and that the appropriate additional premium, if applicable, is charged.

What is not covered

There will be exclusions, and so a thorough understanding of the policy wording is crucial. Typically for whisky or wine collections, cover for a single bottle ceases as soon as it is opened. Furthermore, loss or damage caused by inherent defect, wear and tear, gradual deterioration, insects, vermin, rust, corrosion, mildew, fungus, atmospheric or climatic conditions, or the action of light would not be covered. However, if damage was caused by extremes of temperature directly resulting from mechanical failure or breakdown of climate control units damaged by fire, lightning, a windstorm or an explosion for instance, cover would indeed apply.

Alexandra Richards is a Development Executive for Private Clients at Bruce Stevenson Insurance Brokers.

Bruce Stevenson Insurance are specialists in private client insurance with access to household policies that happily accommodate high value wine or whisky collections, or insurers who offer wine and whisky insurance in isolation with a specialist policy wording.