American Billionaire Loses $400 Million Insurance Claim Dispute Over Damaged Artwork

If you think you’re having a bad day, Ronald O. Perelman is likely having a worse one.

The American billionaire and art collector recently lost a $400 million insurance claim dispute involving five fire-damaged paintings.

A 2018 fire at Perelman’s East Hampton estate purportedly damaged the five paintings, including two works by Andy Warhol, two by Ed Ruscha, and one by Cy Twombly.

The paintings themselves weren’t burned, destroyed, or visibly damaged during the fire. However, Perelman and his team insisted the paintings lost their “spark” and “oomph,” which is why he was entitled to $400 million in compensation.

After years of back and forth, the case finally made its way to the State Supreme Court in Manhattan in September, where Justice Joel M. Cohen claimed there was “no visible damage” to the paintings that would reduce their value, denying Perelman’s request for compensation.

Artwork Had “No Visible Damage”

A standard homeowners insurance policy covers fire damage to your possessions – including artwork.

Whether your artwork is worth $50 or $50 million, you can buy insurance to cover artwork, protecting it against unexpected events – like a house fire.

To qualify for compensation, however, your possessions must have actually been damaged in the incident.

According to Justice Cohen, there was “nothing traceable to the fire” that would reduce the value of the artwork. Cohen, in his bench ruling, specifically argued the artworks can be “enjoyed as they were before.”

Insurers Call Perelman’s Complaint “A Money Grab”

Perelman’s lawyers had previously argued the paintings had “lost their luster, lost their depth,” and “lost some of their definition and lost a lot of their character.” Smoke and soot from the fire purportedly penetrated the protective frames of the paintings, dulling their color and contrast – even without visible damage.

Perelman’s insurers felt otherwise. His insurers, including Lloyd’s of London, Chubb, and AIG, argued the works were unscathed. They even claimed Perelman filed the complaint while under severe financial pressure.

Perelman, who was once one of the richest men in America, sold 71 works of art for around $1 billion between 2020 and 2022 to satisfy lenders after Deutsche Bank issued a margin call. His financial struggles come from the collapse in the value of Revlon stock, which he had long used as collateral for loans.

In court papers, in fact, Perelman’s insurers called the case “a money grab.”

Making things look worse for Perelman, he had already sold a painting for $30 million – a painting purportedly damaged in that same house fire. Insurers cited this sale as evidence that the paintings were marketable, claiming Perelman filed the complaint only after the other paintings failed to sell.

One of the Art Market’s “Most Closely Watched Legal Battles”

What happens when fire damages a $30 million painting? Who pays when a natural disaster destroys half a billion dollars’ worth of artwork?

As ARTnews explains, the Perelman case has been “one of the art market’s most closely watched legal battles.” The case has lasted years and involved nearly 2,000 court filings. It illustrates the complications of quantifying damage to art – especially when the damage is not visible.

Maybe Perelman should have hired a public adjuster.