Collecting wine is flourishing as both a hobby and an investment, but whether to savour or buy en primeur as a maturing asset, it’s essential that you effectively protect your cellar to reap its full potential.

Collecting wine is flourishing as both a hobby and an investment, but whether to savour or buy en primeur as a maturing asset, it’s essential that you effectively protect your cellar to reap its full potential. Many large collectors, including those with cellar plans where wine merchants regularly purchase the wine on your behalf, will use bonded warehouses or specialist wine storage companies. Such facilities are responsible for providing optimum storage conditions and will normally charge an annual fee per case, which also includes the insurance cover. However, you should check that in the event of a loss such as fire the claim would be settled on the basis of market value at the date of the incident – in other words, that the wine merchant or storage facility regularly reviews the worth of your asset and updates as necessary. If you have laid bottles down for your heirs over a long period of time, the wine may have significantly accumulated in value. The latest craze in private wine cellars is the spiral cellar. This means it’s now possible to have a 1,000 bottle wine facility within days and for a fraction of the cost of having a full cellar dug out in your home. If you do intend to store a wine collection yourself, creating and maintaining the correct storage conditions is crucial. Under standard insurance policy wordings, underwriters will not pay for a loss resulting from changes in temperature or humidity, unless as a result of an insured peril, such as fire or flood. Therefore temperature, light and humidity all need to be carefully controlled, both to ensure the wine matures to its best and to prevent its deterioration. A good example of this occurred recently when a client living on the west coast of the US had his cellar refurbished by a firm of builders. Prior to the work commencing the wine was temporarily moved outside to prevent damage. However, six months later, on returning to drink some of the wine, the owner found that the whole collection had been ruined through light and heat exposure. This eventuality was not covered by the client’s insurance policy and resulted in a protracted settlement via the contractor. This problem could have been easily avoided through better risk management, in the form of a specialist storage facility. We tend to see few wine claims from private collectors as individuals usually store their cases in such specialist storage facilities, however, when collections are kept at home, claims are, more often than not, as a result of accidental damage or flood. Although water won’t contaminate the wine, a flood can be a huge problem. If the labels peel off, you won’t necessarily know what the wine is and this will seriously reduce its value. Collectors can avoid this risk by storing wine well off the ground and having a detailed cellar map, so that it is easy to locate and identify your wine. Loss of label insurance can also be taken out as a policy extension. We were asked to arrange this form of cover for a restaurant in Paris, as the owner was worried that building work on the neighbouring property could result in the flooding of his wine cellar. Simple precautions like using waterproof signage on cellar bins can prove invaluable when sorting out the aftermath of a serious flood. Moving house and transporting your collection is another major risk. As with fine art, most losses occur during transit. It is essential to hire specialist movers to handle your collection. Indeed, it is normally a standard condition within your insurance policy that a professional packer or shipper is used. But even if you don’t intend to move, you should regularly update your broker on your wine collection. Increased popularity in collecting wines, particularly en primeur, has caused values to rise. It is therefore important to keep an eye on the market and the shifting value of your collection. Also, if you’re growing your collection, inform your broker as this could affect the premium and cover. You must regularly re-value your collection to be certain you have sufficient cover in case you do have to make a claim. When investing in wine at auction, it is also worth checking who is insuring the wine after the sale while it is in storage or being delivered. If you know at what point you become liable, you can prevent misunderstanding over responsibility. If protected properly your wine collection might, in time, provide you with a handsome return on investment not to mention years of drinking enjoyment!