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How Art Galleries Can Prevent the Sale of Counterfeit Pieces

Art buyers enter galleries expecting that the artist's name listed on the tag matches the work. To sell someone a counterfeit, even if it's a close visual match, is simply dishonest. One incident like this can send your professional reputation spiraling faster than you can say ''fake Rothko.'' Furthermore, this level of negligence opens you up to potential lawsuits.

Business insurance for an art gallery will protect your finances if a customer sues you for unwittingly selling fake art. After all, professional liability insurance covers ''negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice'' claims. Your policy will pay the costs of your legal defense and judgments above your deductible. But art sellers be warned: Even this important commercial coverage doesn't extend to dishonesty.

Forgeries enter the art world in a variety of ways. Sometimes, artists create lookalikes specifically for the purpose of scamming auctions and showings. Other times, they do so to pay the bills—but their counterfeit products end up morphing into a bigger deceit. John Myatt, one of the most notorious forgers in recent history, was primarily worried about feeding his family. He created ''genuine fakes'' and advertised them as such. But then a buyer came back and said he'd sold one of these fakes to Christie's for over $30,000 USD. Myatt eventually went to prison for fraud—but he estimates 120 of his fakes are still out in the world.

Some experts believe about half of all art in circulation is fake. But 70 to 90 percent of the artwork the Fine Arts Expert Institute (FAEI) sees is fake. This organization uses scientific methods like infrared reflectography and radiocarbon dating to determine authenticity, as Business Insider reports.

While your art gallery may lack ready access to these tech tools, you can reduce the risk of selling forgeries. As Art Law Journal writes, ''Most well-respected galleries would be hesitant to ruin their reputation by even accidentally selling a forgery.'' Start by looking into the provenance—or official ownership history—before you purchase or sell a single piece. A solid provenance will account for an artwork's entire lifespan, from creation to current day. Your gallery should also develop a partnership with a reputable, certified art appraiser. These individuals have the training, credentials, and skill set to determine what's what in the art world.

If the documentation seems too vague to verify or too good to be true, it probably is. When 165-year-old gallery Knoedler & Company was found to be selling fakes, one lawsuit honed in on this concept. Collectors who acquired counterfeits through the company believe the director should have realized the paintings were fake. The gallery was allegedly buying them for prices below market value from an unscrupulous dealer. It turns out these replications were coming out of a garage in Queens, New York. The gallery ended up settling the lawsuit, which was originally seeking $25 million in damages for an undisclosed amount. The defendants alleged they too, were misled; the plaintiffs accused them of ignoring red flags.

Selling artwork without achieving proper authentication is a dangerous gamble. Your art gallery should take all necessary precautions to protect its financial and reputational well-being.

And, in case a buyer or collector does sue you for a mistake, carry business insurance for your art gallery. Here's where CoverHound can help. Get a free quote for your gallery today!

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Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
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