Authenticity risk (artworks)
The risk that an artwork proves fake or wrongly attributed, which wipes out its value; it is excluded from fine art policies and is handled through due diligence, sellers' contractual guarantees and sometimes specific insurance.
An artwork's value rests mostly on its attribution: a Rothko and a perfect copy are not worth the same, even if they are physically identical. Authenticity risk is not physical damage, and fine art policies exclude it: they cover the object, not the accuracy of what is said about it. It is handled first by the buyer's due diligence, examination of provenance and the catalog raisonné, scientific analysis of pigments and supports, opinions from recognized specialists, and by auction houses' contractual guarantees, which often refund the buyer for a few years if the work proves counterfeit. A few insurers offer title and authenticity covers, with very selective underwriting. For an underwriter, a disputed attribution also affects the agreed value: insuring a doubtful object at a masterpiece's value means paying premium on a value that may not exist.
New York's Knoedler gallery, founded in 1846, closed in November 2011 after selling for some fifteen years about 80 million dollars of fake Rothkos, Pollocks and Motherwells, painted by a forger in Queens and supplied by a single intermediary.
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