You can insure the title of art, but domain names lag behind.
I’ve written numerous times about the potential of domain name title insurance. I’ve argued it’s not a profitable product to offer. Although I still feel that way, I was surprised to see an article in the latest Economist about title insurance for art.
The article discusses Blanchisseuses souffrant des dents by Edgar Degas, which Sotheby’s listed for sale in an auction. Someone viewing the auction catalog was surprised to see the painting for sale since he knew it had been stolen in 1973.
The person who had listed it for sale most likely was unaware it was stolen when he bought it. Yet he or she is also probably out whatever they paid for the stolen artwork.
Thankfully there’s title insurance for art. Insurance company ARIS insures the title on art for a one time charge between 1.75% and 6% of the art’s value. The company has insured around 1,000 items and hasn’t yet had a claim.
There are numerous cases in the domain name industry where someone buys or sells a stolen domain name without knowing it. It can be a costly mistake. So could we have domain insurance similar to art insurance?
The domain name industry is somewhat different from the art industry. The article discusses the complexity of understanding title in art:
An alternative to art-title insurance is for collectors to do due diligence about the provenance of a work of art themselves. Yet many do not have the time or the tools to carry out such research, which is a complex undertaking as there is no central register of art ownership.
In the domain name industry we do have a central register of ownership, and you can easily track history thanks to DomainTools.
Another obstacle is the relatively low value of most domain name transactions and the nature of the typical domain buyer. We’re talking about an industry where someone will buy a domain name for $25,000 from a person they’ve never met without bothering to sign a contract. Would the same buyer be willing to pay $1,000 for title insurance? I doubt it.