How to Protect Your Wine From Heat, Power Outages and Earthquakes (Yes, Earthquakes) — WSJ

Eric LeVine lives in a 7,000-square-foot Foursquare Craftsman home in Seattle that was built in 1912. In 2007, he completed a 2,000-square-foot addition that included a garage, a home theater, a sunroom and a deck. Mr. Levine, founder and chief executive officer of CellarTracker, a website and app for cataloging wine collections, and an avid wine connoisseur, also built two subterranean wine cellars as part of the addition.

With 500 square feet of space, the cellars can hold 8,000 bottles, although his personal collection currently consists of 3,200. “A huge temperature-controlled, humid cellar with ample space is an incredible luxury,” he said. “Having a nice, purpose-built cellar, either a showpiece cellar or a more functional cellar, is the single best thing that will preserve your collection.”

With many oenophiles keeping their collections at home, proper storage and risk mitigation can help protect the investment’s value.

Collectors who store their wine at home typically have three options: a custom wine cellar, often built into a basement or garage; a glass display area or wine wall; or a refrigerated wine cabinet such as those made in France by EuroCave. All provide protection against the “five enemies of wine,” which Marshall Tilden III, chief revenue and education officer at Wine Enthusiast, said are heat, lack of humidity, vibration, UV light rays and odors.

Freddy Matson, a wine importer who lives in Sarasota, Fla., built a dedicated wine cellar in the garage of his three-bedroom ranch home, which was built in 1957. The cellar, which measures 12 feet long by 8 feet high by 6 feet deep, has plenty of space to store his collection of red and white wines from the Burgundy and Rhone Valley regions, worth about $250,000. While Mr. Matson didn’t install an automatic backup generator, he does have a gas-powered model to keep power flowing to his cellar if there is a disruption.

But even with the best planning and equipment, things can go wrong. The power can go out, a hurricane can flood the area or an earthquake can cause vibrations, all of which can damage wine. That is where insurance can help. Mr. Tilden said he has clients from southwest Florida whose wine coolers washed away in floods caused by Hurricane Ian. Because they were insured, they are now replacing their storage units and wine.

Homeowners have two ways to insure their wine collections. A homeowners insurance policy provides basic protection under the contents coverage section of the policy. But this coverage would be limited and would likely not provide adequate coverage for the entire collection in the event of a loss. In addition, any such claims would be subject to the policy deductible.

A better option is a separate valuable articles policy, typically offered by insurance companies with high-net-worth clients. According to Will Van Den Heuvel, senior vice president, personal lines, The Cincinnati Insurance Co., this type of policy provides all-risk insurance coverage for wine collections, and, subject to the terms of the policy, may cover some types of loss that might be excluded on a regular homeowner’s policy, such as spoilage due to mechanical breakdown of your cellar’s temperature/humidity control systems or breakage.

Homeowners opting for a valuable articles policy can select one blanket coverage limit for their entire collection, which gives them the flexibility to drink, add or remove bottles without having to notify the insurance company. In that case, the per-item limit on a single bottle of wine would be $50,000 in case of loss, Mr. Van Den Heuvel said. Alternatively, the collection can be individually scheduled, where each bottle is separately listed on the policy. This option works best for higher-value items or if the owner plans to keep them for a longer period, he added.

With the exception of “significant” bottles that require appraisals, Mr. Van Den Heuvel said that the company relies on clients to be honest about the authenticity of their wines. “Our experience has been that there is very little fraud with this type of insurance,” he said. “Typically, policyholders that are collecting wine are fairly well off and have a fine art collection, jewelry or car collection, so they have a robust track record of their insurance and loss history.”

If you’re planning to store wine in your home, here are some things to consider:

Reduce your insurance premium by mitigating risk. According to Mr. Van Den Heuvel, insurance coverage for wine costs about $0.35 per $100 of coverage in most parts of the country. High-risk areas such as Florida or California would be more. But homeowners can qualify for credits by installing a backup generator to maintain climate controls in the event of a power outage and a central station security and fire-detection system. Laura Doyle, vice president, art, jewelry and valuable collections manager at Chubb, a property and casualty insurance company, suggests that collectors install leak sensors in their wine cellar, as water is a leading source of loss.

Inventory your collection on a regular basis. Whether it is a spreadsheet or a dedicated website or app such as CellarTracker, make sure you document your collection, not only to have a record for your insurance company in case of loss, but also because wine has so-called drinking windows, after which they are no longer at their peak and may lose value.

Beware of fakes. “About 20% of the wine circulating in the world today is fake wine,” said Charlie Arturaola, a global wine consultant and appraiser who lives in Saint-Riquier-ès-Plains, France. Since insurance doesn’t provide protection against counterfeit wines, be sure to buy only from a trusted seller. And for larger investments, such as wines costing over $1,000 or for those purchasing entire cellars, consider hiring a wine authenticator. Jason Adams, a certified wine authenticator in Fort Myers, Fla., charges about $600 per bottle for full authentication; for larger collections, he typically charges $2,500 a day for a less-intensive bottle inspection and can examine about 1,200 bottles a day

By Robyn A. Friedman