The text of a letter about auctioneers' insurance policies printed in the Antiques Trade Gazette in the weekly issue ending 25 August 2001

Dear Sir,

I wrote to you in January this year about insurance offered by the auction houses, making the points that damage or loss before a sale is covered [less charges and commissions] only at the median of the estimates, but the 1% premium is levied on the actual hammer price irrespective of how much it exceeds the estimates, and furthermore that this cover is operative for only five days after the sale, from which time buyers are required to take out their own insurance.

I had not realised at that time just how significant an element the insurance premiums are in the auction houses' finances. Potentially, these premiums amount to a staggering 50% of the total profits of the major auction houses after costs and tax - their net return on income being just 2%.

This perhaps explains why Sotheby's, at least, seems to go out of its way to make life difficult for owners who do not require the insurance it offers. Not only does Sotheby's insist on owners signing an indemnity form under these circumstances, which is fair enough, but it also puts them to the trouble of providing a certificate of insurance from their own insurers, though why this should be so is difficult to understand. The wording they used to me in a letter was 'that it is essential that we receive a certificate of insurance from your own insurers plus a waiver of subrogation as proof of your own cover.'

Why can one not just choose not to have insurance?

Yours sincerely,

Roy Davids