A New York judge has rejected Ron Perelman’s attempt to collect more than $400 million from insurers over five paintings he claimed were harmed in a 2018 fire at his East Hampton estate, the Creeks.  The high-stakes case highlights how elusive and complex it can be to quantify claims of subtle damage to fine art in insurance disputes, where questions of value, perception, and proof often collide.

Background

After the 2018 fire at Perelman’s home, his multiple insurers agreed that more than two dozen artworks from his collection had been damaged.  But they disputed Perelman’s claims as to five works—two by Andy Warhol, two by Ed Ruscha, and one by Cy Twombly.  Perelman insisted they had “lost their luster, lost their depth, lost some of their definition and lost a lot of their character.”  He argued that heat, smoke, soot, moisture, and rough handling had dulled the works’ vibrancy and robbed them of their “spark” and “oomph,” even if the changes were not visible to the naked eye.

This past summer, the case proceeded to a bench trial (i.e., a trial where the judge, not a jury, acts as the factfinder).  Conservators and scientists presented testimony about smoke and soot, and the impact of humidity on the works.  The insurers for their part maintained that the paintings were unscathed and suggested that any alleged deterioration either predated the fire or was immaterial.  They also alleged that Perelman was motivated by financial pressures following a drop in the value of his Revlon stock (the company subsequently entered Chapter 11 bankruptcy in 2022).  

Some of the art world’s prominent names came up in the trial.  Citadel founder Ken Griffin and prominent gallerist Larry Gagosian viewed works at the estate in 2020, and Griffin then bought another painting that had been in the house during the fire—a fact the insurers cited as evidence that Perelman continued to treat his collection as marketable, undermining his claims of impairment.

Last week, Justice Joel Cohen of the New York Supreme Court ruled that the works showed “no visible damage” attributable to the fire, and could still be “enjoyed” as they were before the fire.  Although Justice Cohen ultimately ruled in the insurers’ favor, he declined to find that Perelman deliberately misled them. 

Valuing Fine Art:  A Complex and Necessary Challenge

This case highlights a recurring theme in many art disputes—namely, the challenge of placing a value on a unique artwork.  Valuation questions in art litigation can require consideration of many types of evidence, whether that means connoisseurship assessments, provenance research, forensic and scientific examinations, condition reports, or exploration of trends and fluctuations in the market for a given artist’s work. 

Here, the ruling against Perelman underscores the evidentiary challenges inherent in art insurance coverage disputes, particularly when claims hinge on subtle damage that may not even be visible to the untrained eye.  This intersection of physical condition and subjective aesthetics is a slippery one, and courts will scrutinize both the circumstances of the alleged damage and the broader context, including prior handling and the market behavior of the works in question.  Without demonstrable evidence of physical damage, subjective assessments of aesthetic change—no matter how strongly felt—may not be sufficient on their own.   

Art is increasingly viewed as both a cultural treasure and an investment asset.  But collectors and insurers alike must grapple with its fragility and the real risk of physical harm—and the litigation that can follow.  For insurers, the decision reinforces the importance of clear policy language and rigorous claims investigations.  For collectors, it is a reminder of the need for thoughtful insurance planning, regular appraisals and condition reports, conservation advice, and protection and security systems to prevent damage in the first place.  And for both insurers and collectors, it underscores that meticulous documentation of both the insured works and any alleged incidents of damage is a must. 



Photo by Cullan Smith on Unsplash