Michael and Constance Flaum, who in 1976 thought they had purchased a $50,000 Renoir painting, are now left with no recourse but to hang an expensive forgery in their home.
Since 2005, the Flaums insured the work of art, valued at $350,000, under a Valuable Articles Endorsement of their homeowner’s insurance policy. In the Spring of 2008, the plaintiffs sought to sell the Renoir painting at Christie’s auction house, only to be told that the painting was rejected from auction and deemed to be a forgery. Previously, the Flaums had received verbal confirmation from a Renoir expert that the painting was authentic.
Plaintiffs placed a $525,000 claim with their insurer for the loss, which was denied on the grounds that they had “not sustained a physical loss” under the terms of the insurance agreement. The Court agreed, finding that the painting still hangs in the plaintiff’s home and despite its now decreased value, no physical loss had occurred. The Court opined that, “to the extent the plaintiffs contend that they suffered a physical loss as a result of the forgery because the painting is not physically a Renoir, such a claim is without merit since under that theory the painting was never physically a Renoir; therefore, no loss occurred”
Special thanks to Christopher D. O’Leary for his contribution to this post. If you have any questions, please contact Denise at email@example.com.