Know How

You Need Wine Collection Insurance. Here’s Why

Even modest cellars need disaster-proofing

Roger Morris By October 18, 2021
illustration of wine bottles under water
Illustration by Jess Cruickshank

At first, it looked like disaster averted.

When celebrity chef Scott Cutaneo and his wife returned to their home in Bernardsville, New Jersey, after a weekend trip earlier this year, a water pipe inside the house had burst, and there were a couple of inches of water on the floor of his wine cellar. The water was quickly pumped out, and the floor mopped and dried. At least, Cutaneo thought, it wasn’t one of those horror stories where returning owners find bottles floating about like a flotilla of ships and detached labels scattered around them like life rafts.

“It’s not a large cellar, only about 800 bottles, but there are some good ones in there — an ’82 Cheval Blanc, a ’59 Lafite — bottles I don’t normally drink,” he says.

But then Cutaneo began noticing a little mold around the bottoms of the expensive wine racks that were custom constructed inside the cellar. “We cleaned it off with bleach and thought that was it,” he says. Then they started smelling mildew — mildew they couldn’t see, where water from the rupture had burrowed inside the walls behind the racks and into the drywall.

“I talked to my insurance broker, and he said, rip everything out because you aren’t going to be able to save anything. So I put the wine bottles in a temperature-controlled storage locker and started getting estimates on having the cellar redone,” Cutaneo says. But he’s not sure the damage is yet over. “I’ve noticed with the fluctuation in humidity that some of the corks had cracked,” he says, pausing, “I haven’t talked to the insurance company about that yet.”

More wine lovers will face this

In recent years, the question of major financial losses from damaged wine cellars has become an urgent topic among wine collectors, as many have suffered major losses from wildfires and flooding due to freakish weather brought on by global warming. Often these losses are only minimally covered by standard homeowner policies, as several collectors in the Northeast U.S. found out when remnants of Hurricane Ida brought abnormal flooding to the area in early September. One prominent New Jersey retailer reports he is serving as a consultant between insurers and two different clients who had severely damaged collections from Ida’s floodwaters. 

During wildfires that have plagued California over the past five years, many people not only lost homes but also expensive wine collections whose monetary value was seldom recovered.

“For those serious wine collectors using professional wine storage facilities, insurance is probably built in as part of the service,” according to a statement sent by Loretta Worters, who heads media relations for the Insurance Information Institute, “but if you store your wine privately, you’ll need to get insurance. Small or inexpensive collections can often be insured under a homeowner’s policy, particularly if the wine is for private consumption; typically, limits can range between $1,000 and $2,500. Larger collections require a stand-alone valuable articles policy, which provides broader coverage than a home policy.” Although the cost of a policy will vary according to the insurer selected, “Stand-alone wine policies cost about 40 to 50 cents for every $100 worth of wine. If your wine collection is worth $100,000, your annual insurance premium will come to around $450. The other important thing about wine insurance is there is no deductible, whereas there is a deductible under a homeowner’s policy.”

Laura Doyle, head of insurer Chubb’s personal risk services, says that collectors should work with an independent agent or broker to obtain a quote, and “will need to provide the value of the collection, details on where it is located, how it is stored and inventoried, and how it is protected against fire and theft.”

State Farm will require a full written inventory of the wine collection, specifically listing the bottles and their individual values, according to Justin Tomczak, spokesman for the major American home insurer. “Additionally, State Farm will ask for an updated inventory annually to determine if the collection has changed over time and if the coverage amount needs to be updated.”

The best protection is prevention

While insurers are happy to sell wine policies, they would prefer collectors never have to cash in on them and recommend measures of protection. At the top of the list are climate control systems that combine both cooling — 55 to 60 degrees — and sufficient humidity — 60% to 80%. David Parker, head of Benchmark Wine Group, has a large business selling to and buying from wine collectors. “I had one client,” he says, “who had sufficient cooling but neglected humidity, and the corks in his collection shrunk.” For the lack of a few hundred dollars of investment in a humidifier, “he lost tens of thousands. Some disasters are self-created.”

And those systems need backup generators in case of power failure, which, in the case of a hurricane, may take weeks to restore. Water-leak sensors and shutoff valves are also important. “Recently, a client returned home from vacation to find that the climate control system for his wine cellar had failed,” Doyle says, “and temperatures were over 80 degrees by the time the issue was found. Over 1,500 bottles were ruined by the heat, with wine seeping through the corks.”

Records should be updated regularly and stored in a safe place other than the wine cellar.

A silver lining in Chef Cutaneo’s dark cloud is that he had fortuitously purchased a special insurance policy that covers his plumbing catastrophe, and he believes all losses will be reimbursed. “I learned in the restaurant business you can never get too much insurance,” he says.