1. Insurance for the Most Serious Fashion
Disasters
Many homeowners policies don't cover couture
clothing and accessories
ENLARGE
Julie Macklowe wears a fall Valentino dress outside her home in Aspen. ​PHOTO: KRISTIN WRIGHT FOR THE WALL
STREET JOURNAL
Christina Binkley
Sept. 2, 2015 5:55 p.m. ET
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Julie Macklowe and her husband Billy take care that their homes and belongings are insured. Ms. Macklowe assumed that her wardrobe, an
impeccable collection that spans from this season’s Valentino and Dior haute couture to Chanel track suits, is covered by her homeowners
insurance, until she recently asked her insurance agent.
“I checked. It totally does not cover it,” says Ms. Macklowe, a former hedge­fund manager and founder of the beauty brand Vbeauté.

2. A designer day dress can easily cost several thousand dollars—haute couture costs six figures—and a closet (or two or three) full of
designer clothes, furs, handbags and shoes can amount to several million dollars. But unlike art, jewelry and watches, insurance companies
traditionally consider apparel to be among household “contents” subject to deductibles and a host of limits and exclusions including mold,
floods and dry­cleaning disasters.
The options for apparel insurance have been limited. Insurer American International Group Inc. is stepping into the breach to offer a new
insurance product aimed at high net worth consumers. Launching this month in New York and Texas and available to clients of ​AIG​’s private
client group, the so­called “wearable collections coverage” should be available in most states by the end of this year, AIG says. (Insurance
companies must seek state­by­state approval.)
ENLARGE
Julie Macklowe’s closet full of designer clothes, shoes and handbags at her home in Aspen.​ PHOTO: KRISTIN WRIGHT
FOR THE WALL STREET JOURNAL
Private clothing storage companies may cover clothing held in their facilities—though many dry cleaners and fur storage companies rely on
clients’ homeowners insurance.
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AIG’s product came about after Doug Greenberg, an owner of apparel­storage firm Garde Robe Online, says he grew worried when most of
his firm’s clients declined to accept Garde Robe’s proffered insurance on clothes that are held in its facilities. “No one ever takes it,” he says.
“They all feel that they’re covered by their homeowners insurance.” (He notes that Garde Robe would take care of any damage that was its
fault.) Mr. Greenberg approached underwriters including AIG and suggested the product.
Special apparel insurance probably isn’t practical for those with closets full of Zara and Banana Republic apparel that is easier and cheaper
to replace than repair. But possibly losing an extensive designer wardrobe can pose a financial risk.
Kathy Reilly, a luxury marketing consultant, discovered this after a pouf seat she purchased introduced moth larvae into her New York
apartment. By the time an exterminator identified the infestation, larvae had devoured the better part of an Hermès blanket and a Max Mara
coat that was “the perfect shade of camel,” among other clothing, she says. Some wasn't salvageable. She has a basket of sweaters that
require repairs.

3.
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A Garde Robe employee retrieving a garment to deliver to a customer. The company stores designer clothes and
accessories for clients in climate controlled environments. ​PHOTO: GARDE ROBE
When shipping the clothing to another home, the infestation spread there as well. Ms. Reilly and her husband have been told the only
solution is to dry clean everything.
Homeowner’s insurance? “Moths aren’t covered,” Ms. Reilly says.
AIG’s couture insurance policy will cover clothing, shoes, handbags and other accessories. It will pay for repairs or to replace garments, if
possible. There is a loss­in­value clause, so if a client’s collection of Birkin bags—which can cost $20,000 or more each—is damaged in a
flood, she can be compensated for the reduced value as well as any repairs. That is a key issue with bags that can cost as much as a house.
Mold, moths and other vermin, floods, earthquake damage and other accidents are covered for apparel just as they were for ‘La Reve’, the
Picasso painting that casino mogul ​Steve Wynn​ famously put his elbow through in 2006.
A clothing collection valued by its owner at $1 million would cost around $3,000 a year to insure, depending on the risks to the clothes,
according to AIG. A closet in a hurricane zone could be costlier, as could one in a rarely occupied third home. A customer’s clothing is
covered world­wide, including in transit—noteworthy for those who worry about checking luggage on airlines.
“We insure clients’ jets, yachts, horse farms and staffs,” says Ron Fiamma, global head of private collections for AIG. When doing a home
risk assessment, one of his inspectors opened a door to a room containing 150 Hermès Birkin bags, suggesting the passion of a collector.
“These are more than just (household) contents,” he says.
AIG estimates that high net worth individuals in the U.S. pay about $5 billion in annual insurance premiums, but says that only about 20% of
them are adequately insured. The company has about 70,000 clients in its private collections group, and has been seeing premiums rise
about 10% annually in recent years, both as people collect more items, and as art and vintage auto values rise.
AIG’s policy offers incentives to clients who store designer clothing with professional storage services where the items will be covered in
breathable garment bags and held in climate­controlled spaces. The company also inspects clients’ homes and often finds that people don’t
consider perils such as plumbing pipes in closet walls, which can lead to water damage and later mold if there is a leak.

4. “One of our biggest sources of damage in New York City is water damage,” Mr. Fiamma says. “You have all these prewar buildings. We’re
constantly having pipes bursting and tubs overflowing.”
To develop the product, AIG sent underwriters to designers’ studios to learn about the materials and workmanship involved in fashion, and
interviewed Garde Robe’s clients to understand the role that clothing plays in their lives.
Garde Robe stores designer clothes for clients and designers in cities including New York and Los Angeles in climate­controlled facilities for
a monthly fee starting at around $350. If it finds mold, moth or other damage on clothes and accessories, the company sometimes declines
to store them.
Ms. Macklowe is considering AIG’s new insurance, depending on the cost. So is Susan Magrino, a New York publicist and Garde Robe client
who recently learned that her homeowners insurance only covers her designer wardrobe for fire or theft.
“You never think about anything until it happens,” Ms. Magrino says.
Write to ​Christina Binkley at ​Christina.Binkley@wsj.com